Rivian Sets IPO at $78, Stonks to the Moon

While no one around this neck of the woods would call themselves experts in finer points of the stock market, we do know how to add. Talking heads at the Wall Street Journal are reporting Rivian has set an initial share price of $78 for its IPO, a heady sum to be sure. What drives this story to another dimension is they’ve allegedly sold 153 million shares at this price.

For those keeping track, that means they raised nearly $12 billion – making RIVN the biggest listing so far in 2021.

Beyond that basic math, however, your author will suggest readers point their browsers to the WSJ for further financial analysis. Suffice it to say that Bloomberg apparently values Rivian at something close to $75 billion, up three-fold from earlier this calendar year. An influx of interest in one’s company, plus actual production of a vehicle, tends to be a net positive. Rivian shares will trade on the Nasdaq.

Here’s the part where this writer’s head starts to spin. Despite these massive valuations, the company lost almost a billion bucks through the first half of 2021 and is on track to lose at least that much again in Q3 due to costs associated with beginning production of the all-electric R1T pickup truck. Being a profitable enterprise yet being worth billions (on paper) is a phenomenon unique to planet Earth, surely. And maybe Ferenginar but only after the Grand Nagus has recited all Rules of Acquisition.

Alert readers and market watchers have been down this road before, of course. Tesla was a money-losing outfit for ages despite attracting investors like flies to honey. It remains an attractive stock for many, even after experiencing a plummet this week following Elon’s bright idea to poll Twitter asking for consensus on divesting some of his stock. With companies like Rivian and Tesla, it appears the lines between automaker and tech company are very blurry – at least to investors.

Rivian has also been in the news lately for other reasons, including allegations of a toxic work culture in which key executives felt they were shut out of certain decision-making processes. The exec has apparently filed suit in California plus taken matters to the American Arbitration Association.

Back on the Wall Street trading floor, those whose job it is to report on such matters are today speculating the Rivian IPO will immediately jump to around $120 at open, boosting its implied valuation to over a hundred billion dollars. For perspective, GM and Ford, companies that’ve been producing vehicles for over a century, have roughly the same valuation. Combined.

Head spinning, indeed.

[Image: Rivian]