Rivian Automotive stock soars in trading debut, in the largest IPO of the year
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Dhinda Kirana
Nov 10, 2021, 3:46:09 PM11/10/21
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Rivian Automotive Inc. went public with a bang on Wednesday, in the largest initial public offering of the year and the seventh largest U.S. IPO by offer size in nearly 30 years.
Rivian RIVN, +28.27% priced its initial public offering late Tuesday at $78, well above its expected range of between $72 and $74 a share, up from an earlier range of $57 to $62 a share. Rivian also increased the size of the offering to 153 million shares, from 135 million. The company raised $11.9 billion.
See also: 5 things to know about Rivian
The stock’s first trade was at $106.75 at 1 p.m. Eastern for 10.3 million shares, or 36.9% above the IPO price. It extended gains since then, to trade recently up 38.5% at $108.00.
Rivian, which has big backers such as Amazon.com Inc. AMZN, -2.01%, Ford Motor Co. F, -4.20%, and T. Rowe Price TROW, -3.00% funds, is hoping to carve a niche for itself offering all-electric pickup trucks and SUVs, the type of vehicles U.S. residents have favored for decades.
Related: More electric pickup trucks are coming to market. Who will buy them?
The auto maker started selling a limited number of its R1T, a two-row, five-seat pickup truck, in September. It plans to launch an SUV, the R1S, in December. Wider sales of the truck and the SUV are expected to begin in December and January. Rivian markets its vehicles as “electric adventure vehicles” with prices starting at low $70,000s.
Rivian also plans to make electric delivery vans for Amazon and have its own charging network.
One of the biggest obstacles for Rivian to overcome is the price of its vehicles, said Jessica Caldwell, an analyst with Edmunds. On a recent test, the electric pickup truck mostly performed as claimed, she said.
It also has the advantage of being first to the market, with Ford planning to launch the electric version of its iconic F-150 next year and the Tesla Inc. TSLA, +2.50% Cybertruck entering production next year and hit volume production by 2023.
But “the long-term volume expectations for a $70,000+ midsize truck aren’t very high,” Caldwell said.
It will be challenging for Rivian to compete with the bigger, cheaper Ford F-150 Lightning when it becomes available, and the competition will grow fiercer as General Motors Co. GM, +1.14% is also expected to unveil its all-electric Silverado at CES next year, she said.
Rivian is America's biggest IPO since Facebook
A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
London (CNN Business)Rivian, the electric vehicle maker backed by Amazon (AMZN) and Ford (F), made its Wall Street debut on Wednesday, surrounded by mania that befits a market that appears to be defying gravity.
What's happening: The company priced its stock above the expected range at $78 apiece, allowing it to raise an estimated $11.9 billion. That's the biggest haul for a US firm since Facebook brought in $16 billion in 2012.
The initial public offering is the largest globally of the year, and the 12th largest listing ever, according to data provider Refinitiv.
Shares started trading at $106.75, a 37% leap. That values Rivian at almost $93 billion, more than both General Motors, which has a market value of $85 billion, and Ford, whose market cap is $80 billion.
The only automakers Rivian is trailing are Tesla, Toyota, Volkswagen and Mercedes-Benz owner Daimler.
What's driving the hype? After some choppiness, electric vehicle stocks are hot again. Late last month, Tesla became the first automaker to be worth more than $1 trillion. Shares in Lucid Motors, which recently started deliveries of its luxury Air sedan, have popped almost 350% this year.
There is a huge market opportunity as the world tries to wean itself off its dependence on fossil fuels. According to the International Energy Agency, there were 10 million electric cars on the road at the end of 2020. By 2030, that number could reach 145 million or higher if governments meet ambitious climate targets.
Investors see Rivian as a prime candidate to cash in on this shift. The company has a deal to deliver 100,000 vehicles to Amazon by 2025. It could try to secure agreements with other logistics companies, too.
"Rivian's order flow and backing from Amazon are key validating signals for investors," said Asad Hussain, senior emerging technology analyst at PitchBook.
But Rivian is far from a mature company. It only started producing and delivering vehicles in September (yes, two months ago). And it faces huge challenges to scale up manufacturing in an environment that's confounding even the biggest players.
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