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Rivian soars above $98 billion value in Wall Street debut, zipping past Ford and GM

The electric truck maker — often described as the next Tesla — scores the biggest IPO of the year

A Rivian R1T pickup was on display Wednesday as the automaker made its debut on the Nasdaq. (Brendan McDermid/Reuters)
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A previous version of this article said Rivian had a $90 million valuation. It should have said $90 billion.

Rivian made its Wall Street debut with an explosive burst, transforming the maker of battery-powered trucks into a $98 billion company and an immediate front-runner in the next-generation auto market.

Though Rivian expects to lose money for the foreseeable future, its initial public offering was the biggest of 2021 and put its valuation ahead of such legacy automakers as Ford and General Motors,

Investors were eager to bet big on a company often described as the next Tesla. Rivian Automotive priced its IPO at $78 a share, well above its target range, after the feedback from its roadshow encouraged it to aim higher. Shares shot up past $106 at the opening bell before falling back. They ended the session at $100.73, a nearly 30 percent climb, giving it a market capitalization of $98.6 billion.

Rivian — whose founder, RJ Scaringe, intends to build into one of the “most recognizable brands in the world” — wants to expand the electric vehicle market beyond the sleek sedans and boxy compacts that currently dominate it. The company produces pickup trucks and SUVs, as well as an electric delivery van it developed in partnership with Amazon.

(Amazon founder Jeff Bezos owns The Washington Post.)

The Irvine, Calif.-based automaker, which began trading Wednesday on the Nasdaq under the RIVN symbol, has fired up Wall Street despite its record of burning through cash. In its prospectus, Rivian estimated it would lose nearly $1.3 billion in the quarter ending Sept. 30, and projected revenue anywhere from zero to $1 million.

But investors are piling into EVs amid a broader industry shift toward cleaner-running vehicles. Tesla shares have been on a tear, up 30 percent in the last month alone, lifting its valuation north of $1 trillion. Ford, Toyota and other automakers are planning multibillion-dollar investments in factories to churn out batteries and other electric vehicle components.

Investors have taken note of Tesla’s soaring fortunes and are pricing Rivian accordingly, said Dan Ives, a managing director at Wedbush. They expect all-electric vehicles will one day dominate the market, and are eagerly placing bets on possible winners.

“Electric vehicles are the biggest transformation to the auto industry since the 1950s, and it represents what we believe to be a $5 trillion market over the next decade in terms of the green tidal wave,” Ives said.

The IPO was the biggest of 2021 and one of the largest of the past three decades, according to MarketWatch.

The initial public offering comes as the world’s policymakers are attempting to lock down a far-reaching deal to reduce greenhouse gases and avert disastrous levels of global warming. A draft agreement circulated at the ongoing COP26 climate summit in Glasgow calls for participating countries to phase out subsidies for fossil fuels.

At least 17 nations have either passed or are considering legislation designed to phase out the sale of gas-powered vehicles in the coming years, Rivian notes in its IPO prospectus.

Yet electric vehicles represent only a sliver of the overall U.S. auto market, recording just 2.4 percent of new auto registrations in the first half of 2021, according to the consumer credit reporting company Experian. For all of 2020, it was 1.7 percent.

Electric vehicles have a higher price point than their gas-powered rivals. Rivian’s R1T pickup truck starts at $67,500, putting it roughly in line with previously advertised prices for Tesla’s long-range Cybertruck. By comparison, Ford’s electric F-150, slated for public release in spring 2022, starts at $39,974.

Rivian has told investors it expects to incur losses for some time as it carries out the expensive work of building out its infrastructure. It disclosed a $288 million loss in the three months ending in Sept. 30, 2020, according to financial records. Its deal with Amazon to deliver 100,000 vehicles should give it a financial lifeline in the short term while it scales up to meet customer demand.

It’s relatively common for companies to go public despite having little or no revenue, as long as some aspect of the business gives investors the expectation that the company could be financially successful down the road. Drug companies, for example, commonly raise funding on the public markets while they are still seeking government approvals to market and sell their products.

Still, some analysts caution that Rivian could be overvalued compared with established automakers — Ford has a market capitalization of $77.4 billion and GM is worth $86 billion — and that it could take years for a company like Rivian to realize its potential.

Rivian’s soaring IPO “comes from a fear of missing out on an early electric vehicle company. … It’s outside of any rational valuation,” said Gene Munster, managing partner at Loup Ventures. “If you thought Tesla was overvalued, this is overvaluation on steroids.”

Before the IPO, Rivian raised $10 billion from deep-pocketed private investors including Ford, BlackRock and Soros Fund Management, as well as other climate-focused investors.