Manitoba Daily

Monday, December 6, 2021

Despite almost no sales, Rivian manages to ride the Tesla hype train

Key sentence:

  • Rivian Automotive surpassed General Motors to become the second most valued automobile company in the United States behind Tesla.
  • The stock jumped another 30%, putting the company’s market capitalization at more than $100 billion in the United States. 
  • Amazon is a funder of Rivian and a potential customer, as the e-commerce behemoth wants to use Rivian trucks in its delivery fleet.

Rivian Automotive, an electric car firm that has only delivered roughly 150 electric pickup trucks to date, largely to its employees, surpassed General Motors to become the second most valued automobile company in the United States behind Tesla on Thursday.

On Wednesday, the California business went public with shares priced at $78 each in an initial public offering (IPO). Those shares were valued at more than $100 after its first day as a public company, valued at $88 billion. Ford isn’t worth that much.

On Thursday, the stock jumped another 30%, putting the company’s market capitalization at more than $100 billion in the United States. That’s more than General Motors, one of the world’s largest automakers, which sold more than 6.8 million vehicles globally last year.

According to data provided by Bloomberg, Rivian’s IPO is the largest in the world so far this year and the largest by a U.S. business since Facebook in 2012.

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Big dreams of the Company in 2022

Despite its ambitious objectives and valuations, the company is quite small. Its goal for this year is to create 1,000 electric vehicles. Rivian released its first car, the R1T electric truck, in September and aimed to release the R1S electric SUV next month.

While the firm has yet to report income from vehicle sales, regulatory records indicate that it has already received 55,400 orders for its automobiles.

Rivian’s high-profile backers include Ford, who invested a half-billion dollars in the company in 2019. The other is Amazon, which had a 20% investment in Rivian before the initial public offering. 

Amazon is a funder of Rivian and a potential customer, as the e-commerce behemoth wants to use Rivian trucks in its delivery fleet.

Instead of focusing on the number of vehicles sold, investors believe Rivian has a lot of potentials as the demand for electric vehicles develops.

Rivian’s $100 billion valuations are impressive. Still, it pales in contrast to Tesla, the electric vehicle maker it is most frequently compared, which is presently valued at more than $1 trillion.

So far this year, Tesla has sold approximately 627,300 automobiles. Rivian claims that within a decade, it wants to be producing one million vehicles per year.

Rivian rides the Tesla hype train to a $100 billion value.

A financial research firm advises against investing in stocks.

Some in the finance industry believe Rivian’s worth is a warning that values have gotten out of hand, similar to Tesla’s climb to become the most expensive automobile company on the planet.

“We believe investors should avoid the temptation to buy Rivian shares, despite the popularity of the electric car market and large advances in Tesla’s stock,” investment research firm New Constructs stated of the company ahead of the IPO.

According to the corporation, when Tesla went public in 2010, it was valued at $1.7 billion in the United States, was already delivering automobiles to paying customers, and was on schedule to sell 1,500 cars in its first year. 

However, Rivian claims it will do more than that, although it is currently valued almost 50 times what Tesla was at the time.

“We think it’s foolish to buy the stock at such a high price until the company has proven it can consistently build more than a handful of cars,” New Constructs said. “Don’t buy a stock just because it’s in a hot sector,” says the author.

Tesla has a market capitalization of more than $1 trillion. It has sold roughly 627,300 automobiles so far this year.

Source: CBC

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