Electric vehicle start-up Rivian surges on Wall Street debut

Rivian Automotive shares  surged as much as 53% in its Nasdaq debut on Wednesday, giving the Amazon-backed electric vehicle maker a market valuation of more than $100bn after the world’s biggest initial public offering (IPO) in 2021.

That made Rivian the second most valuable US automaker at one point behind Tesla, which is worth $1.01-trillion. Despite just having started selling vehicles and having little revenue to report, Rivian ranked ahead of General Motors (GM) at $85bn; Ford Motor at about $77bn, and Lucid Group at $65bn before it pared some gains.

The stock opened at $106.75 per share, blowing past the offer price of $78, and rose as high as $119.46. It was still trading above $100 late Wednesday afternoon.

"Rivian’s IPO showcases strong investor excitement about electrification and mobility technology," said Asad Hussain, senior mobility analyst at PitchBook.

Since 2020, EV companies have emerged as some of the hottest investments. Including securities such as options and restricted stock units, Rivian’s fully diluted valuation exceeded $106bn at its debut price.

The IPO allows Rivian to raise about $12bn to fund growth, and that figure could rise to $13.7bn if the full over-allotment of shares is exercised.

"The transition to a public company (and) the growth in our capital base" enables Rivian to develop "promising products and volume and growth in terms of new segments and new vehicles that we'll be going into," Rivian CEO  RJ Scaringe said in an interview.

Wall Street’s biggest institutional investors, including T Rowe Price and BlackRock, are betting on Rivian to be the next big player in a sector dominated by Tesla   amid mounting pressure on carmakers in China and Europe to eliminate vehicle emissions.

Amazon.com  is Rivian’s largest shareholder with a 20% stake.

Rivian’s IPO comes against the backdrop of the UN Climate Summit, where carmakers, airlines and governments unveiled a raft of pledges to cut greenhouse gas emissions from global transport.

GM CEO Mary Barra on Wednesday said Rivian’s IPO only showed how undervalued her company is.

"What it highlights to me is the huge opportunity," she said at a New York Times event. "General Motors is so undervalued."

Rivian has been investing heavily to ramp up production, doubling down on its upscale all-electric R1T pickup truck, which was launched in September. It plans to follow that with an SUV and delivery van, hitting some of the hottest segments in the market.

The Irvine, California-based company plans to build at least one million vehicles a year by the end of the decade, Scaringe said. It has a plant in Illinois, and has announced plans to open a second US factory and eventually setting up production in China and Europe.

"Rivian is in the early stages of delivering its first vehicles to customers, which tells investors the company and vehicles are 'real' and not merely pictures in a slide deck," DA Davidson & Co analyst Michael Shlisky said. "This has been an issue with other EV companies in recent months."

On Wednesday, 10 environmental and advocacy groups, including Sierra Club, Greenpeace and others, called on Rivian to engage with labor unions as the company grows. Workers at Rivian’s plant in Illinois are not unionised.

Founded in 2009 as Mainstream Motors by Scaringe, the company was renamed in 2011 as Rivian, a name derived from "Indian River" in Florida, a place Scaringe frequented in a rowboat as a youth.

Scaringe will hold all outstanding Class B common shares after the IPO and get 10 votes per share, Rivian said in a filing.

Rivian, also backed by Ford, priced an upsized IPO of 153-million shares at $78 per share, raising nearly $12bn, making it one of the biggest US initial public offerings. Ford declined to say what it plans to do with its Rivian stake of about 12%, which was worth about $10bn on Wednesday afternoon.

Amazon, T Rowe Price, Franklin Templeton, Capital Research and Blackstone are among a group of "cornerstone investors" which are indicated to buy up to $5bn worth of shares, according to the filing.

Rivian’s shares were also offered to retail investors on Social Finance (SoFi).

Morgan Stanley, Goldman Sachs and JP Morgan were the lead underwriters for the offering.

Reuters