Electric vehicle manufacturer, Rivian, is planning an IPO. Despite producing nearly a billion dollars in losses in the first half of 2021, the company, which has few customers, may be valued at nearly $53 billion when shares go public. That’s more than many established, profitable, automotive manufacturers. How big is the appetite of investors for electric vehicle manufacturers that don’t make a lot of (or any) money? Dave Lee and Miles Kruppa report in the Financial Times:
Rivian, the electric automotive company backed by Amazon, is targeting a valuation as high as $53bn when it makes its debut on the Nasdaq, potentially as soon as next week.
At the top end of its range of $57-$62 a share, Rivian would begin trading at a value higher than the likes of carmakers Kia and Nissan, and would raise just less than $8.4bn from the offering.
It comes despite the company suffering growing losses — almost $1bn in the first half of this year — as it builds out its capabilities to mass-produce its range of electric vans and trucks.
Investors including Blackstone, T Rowe Price and Daniel Loeb’s Third Point have indicated interest in purchasing up to $5bn of Rivian’s stock at the offering price, according to an updated prospectus published on Monday.
Amazon ranked as Rivian’s largest outside shareholder, with a 22.4 per cent stake. The ecommerce group had indicated interest in purchasing $200m in additional shares during the IPO, the prospectus said.
The market debut would also result in a windfall for founder RJ Scaringe, which owns more than 17.6m shares that would be worth a total of $1.1bn at the top of the price range.
Investors will hope Rivian can position itself as a Tesla-like manufacturer for heavy-duty commercial vehicles, a prospect backed up by Amazon’s order of 100,000 custom-built delivery vans for its logistics network.
The vehicles are due to be delivered by 2025, with a limited number already being tested in several US states. The vans are the cornerstone of Amazon’s efforts to reduce its carbon footprint, having pledged to be net zero carbon by 2040.
But Rivian noted in its risk factors that since a “significant portion” of its initial revenue would be derived from its Amazon deal, any disruption to that relationship would leave it “materially and adversely affected”.
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