Rivian Automotive: Wall Street embraces venture capital risk in the public markets

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If anyone deserves praise for Rivian’s success, it could be the two wealthiest men in the world, Elon Musk and Jeff Bezos.

on Wednesday, The hyped electric truck maker After selling $ 12 billion in shares, we started trading. According to Bloomberg data, the stock opened at a valuation of $ 93 billion, 37% above the float price.

This looks incredibly expensive for newly listed companies. Even more shocking, the company made probably $ 1 million in revenue in the last quarter, according to securities filing.

The Bulls definitely bow to Musk. Tesla has soared to over $ 1 trillion in stock value, showing that unlikely things can happen. Emerging car makers can produce large vehicles. Optimists also benefit Bezos. Amazon provided Rivian with early capital and became an important customer by ordering 100,000 trucks.

Rivian may have won the highest award in the year of the newly listed banner. Other electric vehicle companies use a special purpose company (Spac) process to share their forecasts for the future. Traditional IPOs like Rivian do not consider such flexibility. Therefore, investors need to rely on quotes on the back of the envelope, along with the reputation of large backers, to accept risks like venture capital.

There are mixed precedents among EV start-ups listed this year. Lucid Motors, a luxury sedan maker backed by the Saudi Arabian government, trades at four times the listed price. However, Fisker, Lordstown Motors, Nikola and others are well off the highs. Over the very long years of earnings, even the slightest change in cash flow outlook can have a significant impact on the calculation of present value.

Tesla plans to build nearly one million vehicles in 2021. So far this year, Rivian has rolled off a dozen from its assembly line. Investors want the acceleration of Rivian production to match the acceleration of truck production. Musk occasionally argues secretly about his company’s reputation. He may now have a new target for his tweets.

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