The electric vehicle company Rivian made its debut on the stock exchange on Wednesday. It ended the day as the biggest initial public offering (IPO) since 2014.
Rivian initially had a $66.5 billion IPO which has since ballooned to $93 billion after just one day of trading. The stock opened at $78 a share and climbed to a high of $119.46, ending the day above $100 after hours. Ford and Amazon have backed Rivian, with Ford’s stake being worth about $10 billion after the IPO. After a big debut, Rivian now is more valuable than more established car companies like General Motors ($77 billion) and Ford ($86 billion). It is after Elon Musk’s Tesla in terms of market capitalization for car companies, standing tall at $1.05 trillion.
Troubled Road Ahead
There is a lot of hype surrounding the company as it has managed a high valuation even though it is not generating any revenue. The company’s stock performance made some of its customers richer thanks to the ability to buy shares pre-IPO when they pre-ordered a product. Companies like Airbnb and Uber similarly set aside some shares for drivers and hosts during their IPOs. The 29% gain on day 1 could appease these customers in the meantime as they wait for their cars. Rivian has just two car models in its product line and just recently opened up a plant in Illinois. Since its inception in September, the plant has only churned out 56 total cars, less than 2 cars a day. As of Oct. 31, the company has a backlog of 55,400 pre-orders according to CNBC.
When talking about the next steps, CEO RJ Scaringe stated “we have to go build a lot of vehicles.” The company does plan on delivering these orders by the end of 2023, but it also has a much larger order on top of the pre-orders to fulfill. Amazon has ordered 100,000 vehicles from the company, which are to be delivered by 2030. The nearly $12 billion raised in the IPO gives the company a much-needed infusion of cash to help fuel the expansion needed to satisfy this demand.
Written by Chiagozie Onyewuchi
Edited by Sheena Robertson
Sources:
HYPEBEAST: Rivian IPO Puts Company’s Valuation at $93 Billion USD; by Jeff Yeung
CNBC: Rivian customers who pre-ordered electric SUVs and trucks made millions from IPO pop; by Ari Levy
The Wall Street Journal: Rivian Shares Surge in Largest U.S. IPO Since 2014; by Ben Foldy
Featured and Top Image Courtesy of htmvalerio’s Flickr Page – Creative Commons License
Inset Image Courtesy of Chris Yarzab’s Flickr Page – Creative Commons License
