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Monday, Jun 5, 2023

Rivian Valuation Over $100B; Tops for OC

Rivian Automotive Inc. (Nasdaq: RIVN) zoomed from zero to a more than $100 billion market cap last week in its stock market debut, becoming OC’s most valuable public company on record, and the year’s largest IPO.

The Irvine electric vehicle maker last Tuesday priced its closely watched IPO at $78 a share—well above initial expectations in the $60 a share range—allowing it to raise $11.9 billion.

The company’s stock subsequently rose as much as 52% in its first day of trading on Wednesday, Nov. 10, before closing up 29% to $100.73.

As of midday Friday, shares were trading around $130, giving it a valuation of about $109 billion. It is currently the second-most valuable automaker in  the U.S., behind Tesla.

The EV maker’s goals are as lofty as its valuation, based on executive statements last week.

“Over the next two decades we need to completely transform our planet’s transportation and energy systems, and today marks an important step in that journey,” founder and CEO RJ Scaringe said in a statement the day Rivian began trading.

The company last week declined further comment on the offering.

Record Setter

Rivian’s IPO is now the largest since Alibaba Group Holding Ltd. (NYSE: BABA) went public in 2014 to raise nearly $22 billion, and it’s the seventh-largest IPO in U.S. history, surpassing the likes of Uber Technologies Inc. (NYSE: UBER) and Spotify Technology S.A. (NYSE: SPOT).

The company, backed by Amazon (Nasdaq: AMZN) and Ford Motor Co. (NYSE: F) among many others, already raised about $10.5 billion in the private markets.

Raising funds on Wall Street is a way of ensuring the company can continue to develop its vehicle portfolio and make good on its goal of helping electrify the world’s vehicle fleet, Scaringe told Bloomberg last week.

“What we’re looking at today is our launch products, but making sure we have the capital to continue scaling the business, building additional production capacity for future products, continue the development of those future products, along with the technologies is really key. And we are really trying to help drive and lead this massive transition that we’re going to have to see over the next 10 to 15 years,” Scaringe told the news outlet.

Rivian currently has its initial R1T truck being delivered to consumers. The R1S SUV is due out next month. The company also has an electric delivery van it’s developed for commercial users, with Amazon’s order for 100,000 called by the EV maker the halo for that business segment.

Rivian said on its website it expects to begin taking orders from fleet customers starting early next year and begin deliveries in early 2023, which could help diversify its business-to-business revenue beyond the Amazon order.

Competitive Advantages

Scaringe, who founded Rivian in 2009, comes out of the public offering with a 9.5% voting stake in the business and shares currently worth more than $2 billion. If certain stock performance thresholds are met and stock options are exercised—Scaringe owns all the company’s Class B shares—he would likely add another $10 billion or so to his fortune, according to a reading of regulatory documents.

Scaringe and the Rivian team have developed a strategy that’s focused on selling direct-to-consumer and a manufacturing plan built around vertical integration, from the company’s software to electronics system.

That includes the FleetOS dashboard offering help with vehicle routing, collision reports, charging information and other tools needed for operating multiple vehicles.

Scaringe, to Bloomberg, struck down any criticism from some that fulfillment of Amazon’s order is being prioritized over anything else as a “misunderstanding.” He further clarified that having consumer and commercial businesses growing at the same time allows for simultaneous development.

Additionally, working with Amazon has helped to inform the needs in last-mile delivery, he said.

The e-commerce company is the largest shareholder in Rivian with a 17.3% stake following last week’s offering.

Near-Term Hurdles

Scaringe tempered last week’s financial news in a letter to consumers, noting “we still have a lot to do, and always should,” and the vehicle maker in the short term has plenty to funnel its focus.

The company is grappling with supply chain constraints that have hampered the operations of not just the automotive industry, but across many business segments.

Rivian is also currently facing two notable lawsuits, the most recent of which was filed earlier this month by former Vice President of Sales and Marketing Laura Schwab, alleging gender discrimination. Schwab joined Rivian late last year from Aston Martin Lagonda Ltd. where she served as its first female president of its Americas division.

The company is also being sued by Tesla, which alleges Rivian poached former employees to gain trade secrets.

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