Rivian surpasses VW’s valuation as EV mania rages
The stock has gained 121% from its debut five days ago
A five-day rally in the shares of Rivian Automotive has led the electric truck start-up to more than double in value since last week’s trading debut, with its market capitalisation now surpassing Volkswagen.
The stock jumped as much as 20% to $179.47 in New York on Tuesday, before ending the day up 15%, marking a 121% gain from the initial public offering (IPO) price of $78. That brought the company’s market valuation to about $153bn at the close, making Rivian the largest US company with zero revenue.
Rivian, which is backed by Amazon.com and Ford Motor, has overtaken Volkswagen’s market capitalisation of $137bn, as investors awash in cash and eager to get into the EV sector now have another stock to invest in, apart from industry trailblazer Tesla.
“It is another sign that froth is creeping back into the marketplace,” said Matthew Maley, chief market strategist at Miller Tabak. “There is still an emergency level of liquidity flowing into the system long after the emergency has passed.”
EV peer Lucid Group also rallied hard on Tuesday, closing up 24% and eclipsing the valuation of Ford in the process. Lucid is now a $91bn company, compared with Ford’s $79bn.
Volkswagen is Europe’s largest automaker with about 10-million vehicle deliveries per year, making it the global number two behind Toyota Motor. Volkswagen generates about €250bn in revenue annually and targets about €15bn in automotive clean net cash flow in 2021. The German industrial giant’s stable of brands includes luxury carmakers Porsche, Audi and Lamborghini as well Scania heavy trucks and Ducati motorbikes.
Meanwhile, Rivian, which is developing an electric truck, R1T, and an electric SUV, R1S, has started delivering some trucks in September, mostly to its own employees. It estimates that annual production will hit 150,000 vehicles at its main facility by late 2023.
EV mania
The rally since the IPO also makes Rivian’s debut week the year’s best, just ahead of Affirm Holdings, which gained 117% during its first five sessions. This data excludes IPOs that raised less than $1bn.
EV stocks have seen heightened interest from retail investors in recent weeks, with Rivian, Lucid and Tesla topping Fidelity’s retail trading platform’s list of most bought assets on Tuesday. Still, a recent sell-off in Tesla shares could also be turning into a boon for Rivian.
“Rivian has become the EV flavour of the month as investors have no clue if Elon Musk is done selling Tesla stock,” Ed Moya, senior market analyst at Oanda, said. Tesla shares have declined 14% since Musk did a Twitter poll earlier in November asking voters if he should sell 10% of his stake in the company, and followed it up with a string of stock sales.
“Wall Street’s view on EVs is that Rivian has so much more growth potential than what they can get from Tesla,” Moya added, referring to the potential returns from both stocks. Tesla, a more mature company than Rivian, now trades at a price-to-earnings multiple of 340, while the New York Stock Exchange FANG+ Index, of which it is a part, trades at about 43 times earnings. For the broader S&P 500 Index, that number is 26.
At one point during Tuesday’s trading, Rivian was worth more than almost 90% of S&P 500 companies, including stocks like Goldman Sachs, Boeing, Citigroup, Starbucks and Caterpillar.
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