The electric vehicle maker is going public with an $80 billion valuation, but when can you buy Rivian stock, and is it a good investment?
Oct. 4, 2021
The electric vehicle (EV) market is booming and as if the competition wasn’t fierce enough on Wall Street, a new player has entered the space. Rivian, a company that started deliveries of its R1T pickup truck last month, just released its filing to become a publicly-traded stock.
It is one of the most hotly-anticipated Initial Public Offerings (IPO) of the year set to hit Wall Street, but who is this new kid on the block? And how did it beat Tesla (NASDAQ: TSLA), GM (NYSE: GM), and Ford (NYSE: F) to launch the first EV pickup truck?
Let’s find out.
What is Rivian?
Rivian Automotive is a Detroit-based company that develops green-powered vehicles. Founded in 2009, Rivian has made great progress so far. It is backed by e-commerce giant Amazon and Detroit neighbor Ford.
Rivian CEO, RJ Scaringe, has employed 6,274 staff as of the end of June and the firm operates a vehicle assembly plant in Normal, Illinois.
According to its filing, Rivian operates six service centers in California, Illinois, Washington, and New York. In addition, it also runs 11 mobile service vehicles that can drive to a client’s home and do repairs.
When is Rivian going public?
Rivian is set to kick off its stock market debut on the Nasdaq under the ticker ‘RIVN.’ No exact date has yet been given for the IPO.
What price are Rivian shares going public at?
Rivian has not given exact terms of how much shares will cost yet.
Rivian’s filing showed potential investors that it is burning through its cash piles to fuel its EV efforts.
Its S1 also reported:
- A net loss of $426 million in 2019, which more than doubled to $1.02 billion in 2020. The money was spent on building its factory in Normal, Illinois, producing its R1T pickup truck and R1S SUV, and employing more staff.
- A net loss of $994 million in the first half of this year, up more than 50% from the same time period last year, as it piled cash into scaling up production for its R1T and R1S.
- That it has employed 6,274 people as of June 30. However, the company told reporters that the number is closer to 8,000 as it employs people in its facilities in Arizona, California, Michigan, Illinois, Vancouver, Canada, and the UK.
- A research and development (R&D) expense of $683 million in the first half of 2021.
Something potential investors need to know about this company is that it will be a while before it becomes profitable, and costs are projected to keep growing. Until 2023, Rivian expects capital expenditures to reach $8 billion as it invests in its infrastructure, battery cell production, charging networks, and software development.
“We are a development stage company and have not generated material revenue to date. Vehicle production and deliveries began in September 2021.”
Rivian’s growth potential
The company already has a commercial delivery van contract with Amazon which is great news as a solid business partnership from an industry giant proves that its product must be up to scratch. The models that Rivian is building for Amazon are planned to launch in December this year.
The Michigan-based company has already received glowing early reviews for its pickup trucks which were in high demand on the EV market. In December, Rivian plans to unveil a seven-passenger SUV called the R1S which should also receive a lot of attention.
Looking ahead, the firm outlined its long-term expansion strategy. First of all, it will sell its models in the U.S. and Canada. From there, it will expand into the Western European market before going on to dominate in Asia. To fuel growth in these new markets, Rivian said it will build local facilities in these places.
One risk of investing in Rivian is its dependence on Amazon. While Amazon has exclusive rights to purchase its electric delivery vehicles for at least four years, it can withdraw from the deal under certain conditions.
Following in rival Tesla’s footsteps, Rivian is also a non-unionized company that could change at any time which might impact labor costs in the future. Rivian is also like Tesla in the sense that it is selling EV’s directly to customers rather than through big dealerships, provides its own vehicle service and repairs, and is building a network of charging stations for drivers to use. This business model has worked out well for Tesla so far, so it will be interesting to see how things play out for the young company.
In its S-1 filing, Rivian said that it had 48,390 preorders for its R1T pickup trucks and R1S SUVs in the U.S. and Canada as of September. While pre-orders, which include a refundable $1,000 deposit, don’t necessarily always convert to sales, they prove how popular the models are.
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