In its Nasdaq debut on November 10, shares of Rivian Automotive Inc (RIVN.O) surged as much as 53% giving the Amazon-backed electric vehicle maker a market valuation of more than $100 billion after the world’s biggest initial public offering this year.
Its shares closed at $100.73, marking a nearly 30% jump from its offering price.
That spike made Rivian the second most valuable U.S. automaker after Tesla Inc (TSLA.O), which is worth $1.06 trillion. Rivian, despite just having started selling vehicles and having little revenue to report, was ranked ahead of General Motors Co (GM.N) at $86.05 billion, Ford Motor Co (F.N) at $77.37 billion, and Lucid Group (LCID.O) at $65.96 billion.
Due to supply-chain constraints having hit automakers globally, Rivian is also having trouble ramping up production in Illinois. Last July the EV maker said that it had experienced delayed launch of vehicles out of Illinois as a result of COVID-19 and its impact on suppliers.
Since last year, the hottest investments that have emerged are EV companies. Rivian’s fully diluted valuation, including securities such as options and restricted stock units, exceeded $106 billion at its debut price.
To fund growth, the IPO allowed Rivian to raise about $12 billion, and if the full-over allotment of shares is exercised, that figure could rise to $13.7 billion. Since Alibaba Group Holding Ltd went public in September 2014, this makes it the biggest U.S. IPO. Rivian Chief Executive R.J. Scaringe said in an interview:
“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.”
In a sector dominated by Tesla Inc (TSLA.O), Wall Street’s biggest institutional investors, including T. Rowe Price (TROW.O) and BlackRock (BLK.N), are betting on Rivian to be the next big player amid mounting pressure on automakers in China and Europe to eliminate vehicle emissions.
With a 20% stake, Amazon.com Inc (AMZN.O) is Rivian’s largest shareholder.
Rivian’s IPO confronts the backdrop of the United Nations Climate Summit, where automakers, airlines, and governments unveiled a raft of pledges to cut greenhouse gas emissions from global transport.
On Wednesday, GM CEO Mary Barra said Rivian’s IPO only showed how undervalued her company is. She said at a New York Times event:
“What it highlights to me is the huge opportunity. General Motors is so undervalued.”
Rivian has been investing heavily to boost production, doubling down on its upscale all-electric R1T pickup truck launched in September. It will hit some of the hottest segments in the market when it follows through with its plan to launch an SUV and delivery van.
Scaringe said that by the end of the decade the Irvine, California-based company plans to build at least one million vehicles a year. It has a plant in Illinois and has announced plans to open a second U.S. factory and eventually set up production in China and Europe. D.A. Davidson & Co analyst Michael Shlisky said:
“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. This has been an issue with other EV companies in recent months.”
On Wednesday, Rivian was urged to engage with labor unions as the company grows by 10 environmental and advocacy groups, including Sierra Club and Greenpeace. Workers at Rivian’s plant in Illinois are not unionized.
Scaringe launched it in 2009 as Mainstream Motors and then it was renamed in 2011 as Rivian, a name derived from “Indian River” in Florida, a place Scaringe frequented in a rowboat as a youth.
Rivian said in a filing that Scaringe will hold all outstanding Class B common shares after the IPO and get 10 votes per share.
Rivian, also backed by Ford, raised nearly $12 billion, making it the biggest U.S. IPO of all time after it priced an upsized IPO of 153 million shares at $78 per share. Ford declined to reveal plans for its Rivian stake of about 12%, which was worth about $10 billion on Wednesday.
According to the filing, Amazon, T. Rowe Price, Franklin Templeton, Capital Research, and Blackstone are among a group of “cornerstone investors” who are indicated to buy up to $5 billion worth of shares.
Retail investors were also offered Rivian’s shares on Social Finance Inc (SoFi).
The lead writers for the offering were Morgan Stanley, Goldman Sachs, and J.P. Morgan.