Should Rivian, a company with almost no revenue, and barely any product sold, be valued at $100 billion (fully diluted)? The company claims to produce electric vehicles but hasn’t produced that many. Should it be valued more than Ford, and about the same as GM? Ben Foldy reports in The Wall Street Journal:
Rivian Automotive Inc. RIVN +20.21% made its debut on the public markets Wednesday, scoring a valuation that instantly made it a rival of traditional car makers and the latest beneficiary of investors’ fervor for greener auto technologies.
The California-based startup, founded in 2009 by a Massachusetts Institute of Technology graduate, closed at $100.73 a share, well above the $78 initial offering price set Tuesday night. The closing price gave Rivian RIVN 17.16% a valuation of roughly $86 billion, based on the expected number of shares outstanding. On a fully diluted basis, the company’s valuation was more than $100 billion.
The highly anticipated initial public offering, which raised more money than any other U.S. listing since 2014, further illustrates the excitement that has been building on Wall Street for electric-vehicle makers, particularly those like Rivian that are still young and relatively unknown but hold promise in challenging the more-established car companies.
Rivian’s debut in many ways defies typical market fundamentals: the startup is barely generating revenue and is still losing money. Wall Street is valuing it more than Ford Motor Co. and about on par with General Motors Co. , which are worth $77.4 billion and $86.05 billion, respectively.
Rivian’s valuation, along with Tesla Inc. at more than $1 trillion, shows the optimism around the car market’s shift to vehicles that run on electricity rather than gasoline—a technology that has created an open field in the race to dominate the future automobile.
With plans to expand its lineup to three models this year, Rivian has attracted investors with big ambitions to bring electric vehicles to the mainstream, including rolling out battery-powered trucks and SUVs. Additionally, it has drawn the backing of some blue chip investors, including Ford, Amazon.com Inc. and asset manager T. Rowe Price Group Inc.
Rivian raised nearly $12 billion in the offering, proceeds that will help it expand factory production and speed development of future vehicle models, Rivian founder and Chief Executive Officer RJ Scaringe said in an interview Tuesday.
“The IPO represents an opportunity to accelerate how quickly we can go,” Mr. Scaringe said, speaking from the company’s factory in Normal, Ill. “We have to go build a lot of vehicles.”
The global auto industry has sharply pivoted to electric vehicles in recent years, a shift being driven in part by stricter auto-emissions regulations around the world and some governments setting timelines for phasing out gasoline-engine vehicles entirely.
GM, Ford and other major car companies are also moving quickly to electrify their showrooms, but investors have largely been captivated by the challenger brands, encouraged by the success of electric-vehicle pioneer Tesla.
On Wednesday, GM CEO Mary Barra said Tesla’s market worth and the fast-rising values of new players like Rivian and Lucid Group Inc. underscore the growth potential for car companies. “General Motors is so undervalued,” Ms. Barra said, during an appearance at a conference held by the New York Times.
“When I look at our ability to scale, to serve customers, I think we’re incredibly well positioned,” she said.
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