If anyone deserves credit for Rivian’s success, it could be the two richest men in the world, Elon Musk and Jeff Bezos.
On Wednesday, the an electric truck manufacturer started trading after selling $ 12 billion worth of shares. Shares opened 37 percent above the floating price for a valuation of $ 93 billion, according to Bloomberg data.
It looks incredibly high for any newly listed company. Even more shockingly, this company, according to its security documents, generated perhaps $ 1 million in revenue in its most recent quarter.
Bulls will no doubt bow before Musk. Tesla has risen to an equity value of more than $ 1 billion, which shows that the unlikely can happen: a novice carmaker can manufacture vehicles on a scale. Optimists also owe a favor to Bezos. Amazon provided early capital to Rivian and became a major customer by ordering 100,000 trucks.
In a banner year for new listings, Rivian might have won the top prize. Other electric vehicle companies have used the special purpose procurement company (SPAC) process to share forward projections. A traditional IPO, like Rivian’s, does not allow for such flexibility. This allows investors to rely on back-of-the-envelope estimates, coupled with the reputation of big fans, to accept venture capital-like risk.
Among EV starters listed this year, precedents have been mixed. Lucid Motors, a luxury sedan manufacturer backed by the government of Saudi Arabia, trades at four times its listing price. But people like Fisker, Lordstown Motors and Nikola are good from their highs. With revenue so many years away, even small changes in cash flow outlook can greatly affect current value calculations.
Tesla will manufacture nearly 1 million vehicles by 2021. So far this year, Rivian has rolled out a dozen of his assembly line. Investors will hope that Rivian’s production acceleration is in line with that of its trucks. Musk occasionally winks sheepishly about his own company’s high valuation. He may now have a new target for his tweets.
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