Rivian Automotive Inc. (RIVN) designs and manufactures electric vehicles (EVs) and accessories and offers related services. The company produces and has begun delivery of its first-generation consumer vehicle, which is a two-row, five-passenger pickup truck named the R1T. Later this year it plans to begin delivering a three-row, seven-passenger SUV named the R1S. These vehicles are equipped with a set of advanced technology systems and are designed to accommodate consumers with active lifestyles. Rivian also plans to launch an electric delivery van (EDV) for business customers.
Rivian’s stock debuted on public markets on Nov. 10, 2021 through a highly-anticipated initial public offering (IPO). As many as 153 million shares were sold at an initial offering price of $78.00, valuing the company at $66.5 billion. The offering raised nearly $12 billion in financing to fuel growth. The shares began trading on the Nasdaq under the symbol “RIVN” at an opening price of $106.75. The stock closed the day trading at $100.73 per share, giving the company a valuation of approximately $86 billion. That’s more than the market capitalization of Ford Motor Co. (F), one of Rivian’s major financial backers.
Key Takeaways
- Rivian is an EV manufacturer and provides related accessories and services.
- Rivian went public under the ticker “RIVN” on Nov. 10, 2021 at an initial offering price of $78.00.
- The company sold 153 million shares, raising nearly $12 billion.
- Rivian’s market value was $127.3 billion at the close of trading on Nov. 12, 2021, three trading days after its IPO.
- The company estimates that it generated $0 to $1 million in sales and a net loss of between $1.2-$1.3 billion in the quarter ended Sept. 30, 2021.
- Traditional automaker Ford and e-commerce giant Amazon are among Rivian’s major shareholders.
Rivian is based in California and was founded in 2009 by Robert J. Scaringe. A graduate of the Massachusetts Institute of Technology, he is the company’s chief executive officer (CEO) and chairman of the board of directors. Scaringe, known as “R.J.” in the industry, highlighted his long-time obsession with cars in a letter filed with the company’s IPO prospectus. Scaringe started his company with the goal of building an efficient sports car. But by 2012, he and the Rivian team concluded that their initial strategy would not meet their goals, and they changed course. They redefined the company’s strategy, refocusing their efforts on the truck, SUV, and crossover segments of the automobile market. Rivian also forged a close business relationship with e-commerce giant Amazon.com Inc. (AMZN) to develop delivery vans and a fleet management platform.
Source: TradingView.
Why the Rivian IPO Matters
Rivian’s IPO raised nearly $12 billion, making it the largest IPO in the U.S. since 2014. The stock was up more than 21% from its initial opening price to the close of trading on Nov. 12, 2021, three trading days after the IPO. The broader U.S. equity market, as measured by the S&P 500, was basically flat over the same period. The size of the IPO and the rapid rise in Rivian’s stock price reflects investors’ excitement about the EV market, especially for startups seeking to develop EVs that compete with traditional automakers.
Shares of EV-maker Tesla, the most valuable automobile company in the world, fell nearly 3% during the same period, between the debut of Rivian’s shares and close of trading on Friday. While both companies operate within the market for EVs, Rivian’s niche is all-terrain vehicles whereas Tesla’s specialty is sedans and SUVs. Ford, which has been focusing on expanding sales of EVs and has a nearly 12% stake in Rivian, saw its shares fall about 1% over the roughly three days of trading.
Amazon also has a large stake in Rivian at nearly 19%. Rivian’s EDV was designed and engineered in direct collaboration with the giant e-retailer. Amazon is the company’s first commercial customer, having already placed an order, subject to modifications, for 100,000 vehicles. Rivian says this is the largest order ever for EVs.
| Rivian Compared to Industry Peers | ||
|---|---|---|
| Market Cap ($B) | Revenue for Q3 2021 (ended Sept. 30, 2021) | |
| Rivian (RIVN) | 127.3 | $0-$1 million (estimate) |
| Tesla (TSLA) | 1,038 | $13.8 billion |
| Ford (F) | 77.9 | $35.7 billion |
Source: Yahoo! Finance (Rivian, Tesla, and Ford); Rivian; Tesla; and Ford.
Rivian Financials
Rivian provided recent financial results in its IPO prospectus. Until the quarterly period ended Sept. 30, 2021, the company had not produced or delivered any vehicles and thus had not generated substantial revenue. It delivered its first 11 R1Ts in September 2021, having produced a total of 12 during the quarter. The company said that these deliveries generated estimated revenue of between $0 and $1 million for the three-month period ended Sept. 30, 2021. The company has been able to finance its operations primarily through the sale of securities and from borrowing.
Rivian estimates that its net loss for the recent quarterly period was between $1.2 billion and $1.3 billion. Those quarterly losses were more than four times larger than the same quarter a year earlier. The company indicated that its operating expenses have increased over the last eight quarters as the development of its R1T, R1S, and EDV vehicle programs continues to advance. It expects to launch the R1S and EDV in December 2021.
Rivian said that it expects to generate most of its revenue in the near term from sales of vehicles, accessories, and regulatory credits. Gradually, it will then begin to generate more substantial revenue from offering value-added services spanning the lifecycle of its vehicles, which will deepen its relationship with customers.
Rivian’s total book value, the difference between its assets and liabilities, was $5.5 billion as of June 30, 2021. Total cash and cash equivalents on the company’s balance sheet at the end of the June were $3.7 billion. The EV maker said that it plans to use the proceeds from its IPO to finance growth and for general corporate purposes, including research and development, sales and general administrative expenses, and capital expenditures.
| Rivian Key Financials | |||
|---|---|---|---|
| Estimate for quarterly period ended Sept. 30, 2021 | Quarterly period ended Sept. 30, 2020 | Quarterly period ended Sept. 30, 2019 | |
| Revenue | $0-$1 million | $0 | $0 |
| Net Loss | $1.2-$1.3 billion | $288 million | $108 million |
Source: Rivian 424(b)(4) Form
How Much is Rivian Worth?
Rivian’s shares finished trading at a price of $129.95 on Nov. 12, 2021. At that price, the company’s total market cap was $127.3 billion, nearly double the valuation estimated based on the initial offering price. Prior to the IPO, the company’s last private funding round took place on July 23, 2021. The company raised $2.5 billion from a group of investors led by Amazon’s Climate Pledge Fund, D1 Capital Partners, Ford, and funds and accounts managed by T. Rowe Price Associates Inc. The additional funds brought Rivian’s total private financing since 2019 to $10.5 billion. In an earlier round of funding in January 2021, the company raised approximately $2.7 billion, valuing it at about $27.6 billion.
The company’s largest shareholders and their percentage holdings beneficially owned after the offering are: Amazon with 18.5% of the company’s shares; funds and accounts managed by T. Rowe Price Associates (15.5%); Global Oryx Co. Ltd. (13.1%); Ford (11.8%); and Manheim Investments Inc. (4.6%).
Rivian Key Competitors
Rivian faces a wide range of competitors both in the broader automobile industry and in the small, but fast growing EV segment. The company expects competition in the EV market to intensify due to a greater regulatory push for alternative fuel vehicles and other factors. Rivian’s competitors include, as mentioned, Tesla and Ford, and also other traditional automakers making a big push into the EV market, such as German-based Volkswagen AG (VOW3) and General Motors Co. (GM). Rivian also faces competition from China-based EV makers like NIO Inc. (NIO) and BYD Auto, a subsidiary of BYD Co. Ltd. (BYDDF). Smaller niche rivals include Nikola Corp. (NKLA).
The Bottom Line
EV maker Rivian’s IPO was the most successful offering in the U.S. since 2014. It went public on the Nasdaq on Nov. 10, 2021 at an IPO price of $78.00, raising nearly $12 billion. The company’s shares, which trade under the ticker symbol “RIVN”, closed trading on Nov. 12, 2021, at a price of $129.95, giving the company a market valuation of $127.3 billion.