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Rivian Automotive IPO will test whether EV stocks can keep living up to the hype

With shares priced above their target range, the buzzy electric vehicle company is making its public debut in one of the most anticipated IPOs of 2021.

Rivian Automotive IPO will test whether EV stocks can keep living up to the hype
[Photo: courtesy of Rivian]

Rivian, the buzzy California electric vehicle company, is making its public debut today.

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The automaker is coming to market after an explosion of electric vehicle (EV) hype in recent years—largely driven by headline magnets like Tesla and Lucid—which put Rivian’s offering on track to be one of the year’s most hotly anticipated. Eleven years after Tesla debuted at a total worth of under $2 billion, Rivian is eyeing a monster valuation of $77 billion and a possible slot among the top 10 biggest IPOs in U.S. history, according to Bloomberg.

Here’s what to know:

The basics

Rivian stock will trade on the Nasdaq under the ticker RIVN. Shares were priced Tuesday at $78—above the target range of $72 to $74, which had already been raised from $57 to $62 a week earlier—in a glowing sign for the company. That pricing puts its valuation north of legacy automakers Honda and Ferrari, as well as Chinese EV giant Nio, and just a couple billion south of American powerhouses Ford and General Motors. Impressive, for a company that shipped its first cars this past month.

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Analyst chatter suggests Rivian could become the “next Tesla,” a vision that Rivian itself pitched during its investor roadshow.

What’s Rivian’s story?

Rivian was created by a doctoral engineering graduate from the Massachusetts Institute of Technology in 2009. It then operated in stealth mode for nearly a decade—collecting more than $500 million in funding along the way—before unveiling its flagship products in 2018: a gas-free pickup truck and sport utility vehicle. It took an additional three years to roll the pickup truck off the factory line in September 2021, when Rivian became the first automaker to sell and deliver battery-charged trucks in the United States, beating Ford and GM to the punch. The SUV is still in production at the company’s Normal, Illinois, manufacturing plant.

How does it compare to competitors?

More rugged and all-terrain than industry leader Tesla—which specializes in sedans—Rivian has succeeded in carving a niche for itself. Those efforts were boosted in 2019 when e-commerce giant Amazon signed a contract to order up to 100,000 electric vans by 2024 as part of its zero-carbon push. According to Securities and Exchange Commission filings, that deal also included exclusive rights to the delivery vans for Amazon for four years, a clause that research firm New Constructs recently concluded could “significantly hamper Rivian’s ability to capture market share”—however, a few days ago the company quietly revealed it would begin selling its trucks and SUVs in fleets to commercial buyers in 2022, which could combat the issue.

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It will also have to jockey with big-name rivals who are releasing their own flashy electric trucks in the coming months, including Ford’s F-150 Lightning, GM’s new Hummer, and Tesla’s Cybertruck.

Current numbers and backers?

Amazon owns roughly 20% of Rivian, and Ford has around a 5% stake. Rivian has posted widening net losses, from $426 million in 2019, to $1 billion in 2020, to $1 billion in the first half of 2021. It expects more losses over the next several years until it ramps up car production.

Latest controversies?

Rivian is facing a few high-profile legal battles. It’s still fighting a lawsuit filed by Tesla last year, which claimed Rivian was poaching staff and stealing proprietary battery formulas. (Rivian has denied any wrongdoing, as Insider reported in October.) And last week, a former female executive filed a gender discrimination lawsuit claiming Rivian fired her for speaking up about an alleged company culture that marginalizes women employees. Notably, the executive’s claim also included allegations that Rivian suffers from quality control problems and unattainable delivery targets. (We’ve reached out to the company for comment on this lawsuit.)

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The bottom line?

Rivian’s IPO will gauge whether investor mania over EV stocks still exists after a recent crop of startups has flooded the market with somewhat bumpy returns, including midwestern hopefuls Workhorse and Lordstown Motors. And as always with such early-stage companies, it will test how willing they are to buy into lofty promises of ambitious growth.

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