Now I will have to tap on my savings to invest this 😂. If they are priced at 50 billion in an IPO by the end of the year is close to 100% increase of how they were priced in an investment round in January! And that would put them above Ford.
Rivian Aims for IPO This Year
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I dislike articles like this. They provide zero evidence — just the dubious “people familiar with the matter“.
I agree that it is not rock solid evidence. But the article is from Bloomberg and they tend to be good on these sort of news. And they just say that Rivian is looking at it. Which let us be honest, it is not much. At this point they should definitely being considering if it would make financial sense or not (which includes going around and asking bankers).
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That further makes my point. The article is a big nothing-burger. There is no substance. The whole thing is basically “Company contemplates maybe or maybe not doing company things.”
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Agreed, they do good reporting and I'm sure they've done their diligence, besides. No one from Rivian or any banker they've spoken will go on record and say "yeah they're totally doing this here's the paperwork to prove it."
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An SPAC is understood to be an easier start, like what a couple other new EV automakers have done recently. I wonder if it will actually be an IPO or SPAC when we finally get official info.
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Until the S1 shows up, it's all speculation.
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Thanks for pointing that out. Info reported to the SEC is indeed a good start.
Till we see updates on that page or through the media, anyone want to guess an IPO launch timeline? Because I think they'll want to do it as strong delivery numbers pour in and the media hypes it up.
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A solid article that explains why Rivian would want to go public at this point.
www.wglt.org
Several experts told WGLT the timing makes sense, even if it does feel a little premature. The stock market is hot right now. There is excitement about EVs—as seen by publicly traded Tesla’s valuation recently topping $800 billion, despite selling far fewer cars than its legacy peers.
“The reason why you may want to consider going to the public market right now, is the market is pricing you like a technology company, not like a car company,” said Jaime Peters, assistant professor of accounting and financial services at Illinois Wesleyan University in Bloomington. “And that’s probably gonna last as long as Elon Musk continues to waive that magic wand he has and convince people that Tesla is worth that much money.”
Many of Rivian’s existing investors, like Amazon, are in it for the long haul. But the calculus may be different for Rivian’s institutional investors like T. Rowe and Black Rock and their clients, said Peters.
“They need a payoff, and there’s only one way to pay off that size of an investment, and that’s an initial public offering,” Peters said. “You go public and you get new investors to basically buy out your old investors, typically at a really large gain for those investors.”
A fall IPO would make sense because that’s shortly after Rivian plans to deliver its first Normal-made electric trucks and SUVs to customers this summer, said Abhishek Varma, associate professor of finance at Illinois State University’s College of Business.
“They’re going to get the vehicles out and they’ll say, ‘Look, we told you we’ll do it. We’ve done it,’” Varma said. “And they’re gonna go to the market, and investors are going to look at that and say, 'Look, this is no longer a concept company. You can see the reality in front of us.'”
Of course, the No. 1 upside of an IPO is the company gets a lot of money. Rivian has a lot of money. It has privately raised $8 billion since the start of 2019.
But starting a car company ain’t cheap.
Rivian previously said it planned to invest around $750 million in its Normal manufacturing plant. Plus, the company still has to build out its retail, charging and service network to actually deliver a good customer experience, among other costs. And it’s competing against not just Tesla but also pivot-to-EV legacy automakers like GM.
“This is a really expensive business,” Peters said. “Tesla is still raising money.”
Rivian founder and CEO RJ Scaringe, in an interview with CNBC in June 2020, said his company had no plans to go public in the foreseeable future. But he said the company was “open” to additional financing to help support its “aggressive growth plans,” CNBC reported.
“We’re in a position where we’re well-capitalized to launch the products, but we are rapidly expanding and growing and accelerating some of our future products,” Scaringe said. “We’re seeing demand being significantly higher than what we initially anticipated, which is leading us to capacitive for higher levels of volume.”
Going public also would allow Rivian to begin compensating its employees with stock. It also raises its profile; there’s something intangibly sexy about your symbol being on the ticker.
And, there are downsides to going public.
While Rivian is certainly sharing some of its financials with existing investors, that information doesn’t become public. Some if it would if Rivian was publicly traded. It would be forced into playing the quarterly earnings game, where investors and the media judge companies based on whether they hit or missed expectations. That can force some companies to think short-term instead of long-term.
There are exceptions. Publicly traded Amazon, one of Rivian’s backers and fleet customers, has a history of long-term thinking and patience, said Sam Abuelsamid, principal analyst for e-mobility at Guidehouse, who is based in Detroit. Amazon’s leaders are willing to re-invest in the company at the expense of short-term profits, he said.
“I wouldn’t be surprised to see Rivian follow a similar path,” Abuelsamid said. “I suspect RJ (Scaringe) is not going to be a leader that’s going to lead based on whatever the market thinks it should be doing on any given quarter.”
Why Rivian Would Want To Go Public
The electric automaker Rivian already has raised billions of dollars from the likes of Amazon and Ford. Why would it want to go public?
Several experts told WGLT the timing makes sense, even if it does feel a little premature. The stock market is hot right now. There is excitement about EVs—as seen by publicly traded Tesla’s valuation recently topping $800 billion, despite selling far fewer cars than its legacy peers.
“The reason why you may want to consider going to the public market right now, is the market is pricing you like a technology company, not like a car company,” said Jaime Peters, assistant professor of accounting and financial services at Illinois Wesleyan University in Bloomington. “And that’s probably gonna last as long as Elon Musk continues to waive that magic wand he has and convince people that Tesla is worth that much money.”
Many of Rivian’s existing investors, like Amazon, are in it for the long haul. But the calculus may be different for Rivian’s institutional investors like T. Rowe and Black Rock and their clients, said Peters.
“They need a payoff, and there’s only one way to pay off that size of an investment, and that’s an initial public offering,” Peters said. “You go public and you get new investors to basically buy out your old investors, typically at a really large gain for those investors.”
A fall IPO would make sense because that’s shortly after Rivian plans to deliver its first Normal-made electric trucks and SUVs to customers this summer, said Abhishek Varma, associate professor of finance at Illinois State University’s College of Business.
“They’re going to get the vehicles out and they’ll say, ‘Look, we told you we’ll do it. We’ve done it,’” Varma said. “And they’re gonna go to the market, and investors are going to look at that and say, 'Look, this is no longer a concept company. You can see the reality in front of us.'”
Of course, the No. 1 upside of an IPO is the company gets a lot of money. Rivian has a lot of money. It has privately raised $8 billion since the start of 2019.
But starting a car company ain’t cheap.
Rivian previously said it planned to invest around $750 million in its Normal manufacturing plant. Plus, the company still has to build out its retail, charging and service network to actually deliver a good customer experience, among other costs. And it’s competing against not just Tesla but also pivot-to-EV legacy automakers like GM.
“This is a really expensive business,” Peters said. “Tesla is still raising money.”
Rivian founder and CEO RJ Scaringe, in an interview with CNBC in June 2020, said his company had no plans to go public in the foreseeable future. But he said the company was “open” to additional financing to help support its “aggressive growth plans,” CNBC reported.
“We’re in a position where we’re well-capitalized to launch the products, but we are rapidly expanding and growing and accelerating some of our future products,” Scaringe said. “We’re seeing demand being significantly higher than what we initially anticipated, which is leading us to capacitive for higher levels of volume.”
Going public also would allow Rivian to begin compensating its employees with stock. It also raises its profile; there’s something intangibly sexy about your symbol being on the ticker.
And, there are downsides to going public.
While Rivian is certainly sharing some of its financials with existing investors, that information doesn’t become public. Some if it would if Rivian was publicly traded. It would be forced into playing the quarterly earnings game, where investors and the media judge companies based on whether they hit or missed expectations. That can force some companies to think short-term instead of long-term.
There are exceptions. Publicly traded Amazon, one of Rivian’s backers and fleet customers, has a history of long-term thinking and patience, said Sam Abuelsamid, principal analyst for e-mobility at Guidehouse, who is based in Detroit. Amazon’s leaders are willing to re-invest in the company at the expense of short-term profits, he said.
“I wouldn’t be surprised to see Rivian follow a similar path,” Abuelsamid said. “I suspect RJ (Scaringe) is not going to be a leader that’s going to lead based on whatever the market thinks it should be doing on any given quarter.”
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There's also, to a very limited degree, internal pressure that gets applied when a company reaches a stage where IPO is feasible and clearly profitable. I can't speak to Rivian but I've been through two startup sales, an IPO and am working for a company now which will eventually IPO. Having had ownership stakes or options in each of these, I've watched what happens when enough employees have been given options (especially higher level execs) and the market is clearly prepared for your company to IPO. The internal pressure ratchets up a fair bit and it takes a strong executive team to not cave to that and move before they are ready.
I totally agree with everything the previous post contained. The timing is perfect for them to do this now, and Rivian likely isn't actually worth the valuation they're looking at (though it's not totally unreasonable if they can prove they'll capture a significant portion of their market). Tesla has so much value because Tesla is more than Tesla, it's SpaceX and Starlink and Solarcity (did they ever rename that part of the business?) and other things that combine to make it (potentially) worth 800B. Tesla as a car company is not now nor never will be making the kind of revenue off car sales that would drive an 800B valuation.
I totally agree with everything the previous post contained. The timing is perfect for them to do this now, and Rivian likely isn't actually worth the valuation they're looking at (though it's not totally unreasonable if they can prove they'll capture a significant portion of their market). Tesla has so much value because Tesla is more than Tesla, it's SpaceX and Starlink and Solarcity (did they ever rename that part of the business?) and other things that combine to make it (potentially) worth 800B. Tesla as a car company is not now nor never will be making the kind of revenue off car sales that would drive an 800B valuation.
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I think Tesla is just a car company. SpaceX, Starlink and Solarcity are separate companies not owned by Tesla and thereby don't contribute to Tesla's revenue. The valuation of Tesla is what the market seems to think Tesla will become, i.e. by far the biggest automobile company in the world.
It would be a good time for Rivian to ride that wave when they start proving themselves with real vehicles being used by customers maybe this fall.
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Here's how Tesla and SpaceX worked with and paid each other in the past year
Among other ways the companies work together, and pay each other, a new filing reveals that SpaceX bought $600,000 worth of Tesla car parts in the first quarter of 2020 alone.
SpaceX owns Starlink.
Tesla acquired SolarCity in 2016.
So yes, all three of these contribute to the valuation of Tesla.
EDIT: Also - I simply refuse to believe that Tesla as a standalone car company is more than what every other car company on the planet combined is worth. That's just ridiculous. Ford Motors has never had a market cap over 45B. Tesla is really 20x bigger than FMC in the future? I doubt it.
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Thanks for the Info. SolarCity doesn't seem to be a big revenue company but who knows what will be. As to SpaceX, there are business transactions with Tesla (Musk being the common link) but the amounts are insignificant.Here's how Tesla and SpaceX worked with and paid each other in the past year
Among other ways the companies work together, and pay each other, a new filing reveals that SpaceX bought $600,000 worth of Tesla car parts in the first quarter of 2020 alone.www.cnbc.com
SpaceX owns Starlink.
Tesla acquired SolarCity in 2016.
So yes, all three of these contribute to the valuation of Tesla.
EDIT: Also - I simply refuse to believe that Tesla as a standalone car company is more than what every other car company on the planet combined is worth. That's just ridiculous. Ford Motors has never had a market cap over 45B. Tesla is really 20x bigger than FMC in the future? I doubt it.
I agree that Tesla's market cap is extraordinary. I believe the theory is that they will achieve much higher profit margins than incumbant car companies via tech advances and cost reduction (no dealerships, simplified production, scale etc.).
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He's also a notorious (market) troll, so I pretty much ignore any of the hot air he bloviates, verbally or in text.
Tesla valuation has nothing to do with Space X, but the solar is part of Tesla. If Tesla is successful in reducing cost of the solar roofs it's a game changer pretty much as the electric car itself. And then there's the self driving technology.
So basically Tesla valuation is a combination of different possible breakthroughs. Mostly solar, self driving and manufacturing.
With that said, I also think it is overvalued. But in a world where dogecoin is worth $8 billion dollars, is it bizarre that Tesla is worth $800?
So basically Tesla valuation is a combination of different possible breakthroughs. Mostly solar, self driving and manufacturing.
With that said, I also think it is overvalued. But in a world where dogecoin is worth $8 billion dollars, is it bizarre that Tesla is worth $800?
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Its expected during a time when major shifts are happening and will take time to settle down to a more normal pace. As more automakers enter the EV market, I expect Tesla stock gradually lower. But who knows, maybe something will see it crashing.
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That was in May when Tesla's stock price was around $150 (adjusted for stock split). Now it's around $800 and between those times the stock has been diluted by issuing new stock to raise capital (and probably also stock options to employees). So in the beginning of May the company was valued at around $140B compared to near $800B today. I haven't heard Musk complain lately about the high price.Even Elon has admitted that Tesla is over-valued, right now.
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Tesla is currently ramping up production so I suppose if their tech advances significantly further than the competition along with efficiencies of mass scale, they could achieve much higher margins on each car than car companies have historically had. I don't see the solar business contributing much to that $800B value.
The cost of producing an electric car will soon be lower than the cost of producing a combustion engine car. The total lifetime cost of ownership is already lower. If car companies are all scrambling to get into the electric game, including many new companies, then few will sell enough to make a profit. It looks like only VW and Tesla are ramping up early enough to get into that position of scale. Hyundai also has potential and of course there are a couple of Chinese companies that are ramping up. I imagine there are a lot of meetings going on now at Toyota on this issue.
It's going to be turbulent times ahead for many car companies, probably with some dying and others combining. Luxury and niche players in markets that aren't so dependent on mass scale may also survive and that's where Rivian is. Having said that I wouldn't be surprised if Rivian merges with another company, possibly an incumbent like Ford or another niche player like Lucid.
I really hope Rivian does well. I've been following them from the start and so far they've been doing everything to perfection from my view. I snuck onto this forum even though I do not have a Rivian on order because they're not yet available in my country. You can count on me as a future R1S owner (after you all have ironed out the bugs).
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