Rivian’s blockbuster IPO: Here’s how to invest

Big news for investors this week: not only is Rivian Automotive, the electric truck maker backed by Amazon and Ford, going public, it is aiming to break records in what is already a milestone year for IPOs.

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Electric vehicles are at the top of the list of hot industries right now, with a number of electric vehicle (EV) makers each competing for their share of this fast-growing market. Rivian is currently considered to be among reigning EV king Tesla’s most serious competitors, and seeks to raise over $8 billion in its upcoming initial public offering (IPO). This would give Rivian a market value of over $55 billion, or even more by some estimates, surpassing XPeng’s listing to become the largest EV IPO in history. This understandably has investors pretty excited.

What is Rivian?

Founded in 2009, the California-based company focuses on the electric truck and SUV niche of the EV industry. Rivian launched its first vehicle in September — the R1T, a five-passenger pickup truck and the first of its kind to hit the market (Tesla’s Cybertruck and the newly unveiled General Motors’ pickup, Chevrolet Beast, are yet to launch). Rivian already has plans to roll out a seven-passenger model next month.

Rivian vs.Tesla

Rivian, like Tesla, snubs traditional advertising, preferring social media channels which speak directly to consumers. Rivian seems to be building a brand based on value, offering powerful and comfortable larger-sized electric vehicles with optional accessories that appeal to the masses. In contrast to Tesla’s futuristically-inspired, angular Cybertruck design that looks like something out of a sci-fi movie, Rivian’s vehicles, while definitely modern, also just as definitely look like, well, pickup trucks. There are sure to be consumers who would prefer one over the other, each design with its own niche market.

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Who is investing in Rivian?

Exciting as Rivian’s retail offerings are, possibly the most attractive aspects of the company for investors include its commercial trucks. Rivian signed an exclusive deal with Amazon to supply the e-commerce giant (which is also a major Rivian shareholder) with an initial order of 100,000 electric delivery vans, beginning in December. 

Rivian’s filing reveals that the EV start-up has also attracted other heavyweight investors, beyond Ford and Amazon which are already on board. A $5 billion share deal is set to include T. Rowe Price, Coatue Management, Third Point Investors, Blackstone Inc., and Soros Funds. 

Is Rivian profitable?

Rivian still hasn’t brought in any revenue in fact, it spent almost $1 billion in operating expenses during the first half of 2021 alone. In the short term, Rivian may be leaning a little too heavily on its singular deal with Amazon, while at the same time navigating daunting semiconductor shortages and supply chain disruptions. And another major Rivian investor, Ford, plans to up the competition by launching its own electric truck in the spring at a much cheaper price point. 

However, with the expected capital from the IPO in addition to several billion dollars in cash still on hand, Rivian seems likely to have enough funds to sustain itself for the next few years. And although it has no revenue to speak of at the moment, that could change quickly. The recent meteoric rise in gas prices has given the EV trend a lift, and serious global environmental initiatives offer the industry tremendous opportunities for both the short and long terms. Yes, EV stocks are hot, but not all companies have built the solid foundation that Rivian has.

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