Tencent technology news on November 13, Wednesday local time, the share price of rivian, an electric vehicle startup, soared 29% on the first day of listing, making the market value of the startup supported by Amazon and Ford reach $86 billion, becoming the sixth largest initial public offering (IPO) on the American Stock Exchange and one of the largest IPO activities this year.
Rivian’s share price was initially priced at $78 a share on Tuesday night, but rose more than 50% at $106.75 a share on Wednesday, and then gave up some of its gains later. At the opening price, rivian’s implied valuation is $91 billion. This makes rivian’s market value surpass that of Ford ($77 billion) and equal to that of General Motors ($86 billion). But there is still a huge gap compared with Tesla, which has a market value of more than $1 trillion.
Rivian’s listing has attracted strong interest from investors who want to profit from the fast-growing electric vehicle market. However, the company has not established a business model and is expected to have revenue of no more than $1 million in the third quarter.
Amazon becomes the biggest winner
According to CrunchBase, the big winners of rivian’s IPO include Amazon, Ford and an investor who made his fortune by selling fuel vehicles in Saudi Arabia.
In 2019, Amazon invested $700 million in the company, but then several rounds of financing led by Amazon made its total private market investment reach $1.8 billion. These investments enabled Amazon to acquire more than 160 million rivian shares, accounting for 22% before the company’s IPO.
This makes Amazon the largest shareholder of rivian. The company said in September that its equity investment, including rivian, was worth $3.8 billion. Two months later, rivian’s share value alone was almost five times that figure. At the issue price of $78 per share, its shareholding value is $12.5 billion.
Amazon is transforming its delivery fleet into renewable energy distribution vehicles. The company revealed in 2019 that it will buy tens of thousands of cars from rivian. Recent documents show that Amazon has some exclusive rights to rivian electric delivery vehicles for at least four years, and then has the right of first refusal. Amazon has ordered 100000 rivian cars, which will be delivered by 2030. The two companies plan to put 10000 delivery trucks on the road as early as next year.
Ford led rivian’s $500 million investment in 2019 and invested in subsequent private financing. The 118 year old carmaker has made heavy bets on electric vehicles in recent years and recently announced its electric version F-150 and Mustang Mach E. Ford’s investment in rivian enabled it to acquire more than 14% of rivian’s shares, worth about $8 billion at the company’s IPO price.
When rivian was not yet listed, T. Rowe price invested in rivian four times, led three rounds, and jointly led the fourth round. T. Rowe price currently holds nearly 19% of rivian’s shares, equivalent to more than 133 million shares, worth $10.4 billion.
Although Ford executives called the cooperation with rivian a strategic investment, the company’s Lincoln department had previously planned to cooperate with the upstart to produce electric vehicles. Novel coronavirus pneumonia was abandoned during the new crown pneumonia outbreak.
Oryx global, a subsidiary of Abdul Latif Jameel, has started by selling Toyota in Saudi Arabia since 1955. The company clearly saw the need for electric vehicles and invested in rivian many years ago. In 2018, after providing more than $300 million in loans to rivian, the company’s investment department Oryx global obtained warrants for rivian shares. At present, Oryx global holds about 16% of rivian’s shares, or 114 million shares, valued at more than $9 billion according to the company’s IPO price.
Rivian founder’s net worth will increase to $14 billion
Thanks to the soaring share price, the value of 1.7% shares held by RJ scaringe, founder and CEO of rivian, reached $1.2 billion. Compared with Elon Musk’s 17% stake in Tesla and Li Bin’s 12% stake in Weilai, RJ scaringe has much less stake in rivian. But he can grow exponentially at any time.
According to rivian’s prospectus, RJ scaringe has about three times as many options as the stock. Based on this calculation, if the company meets all its stock price benchmarks, the option value of RJ scaringe may be as high as $10.2 billion. This will increase his net worth to nearly $14 billion. According to the Bloomberg billionaires index, this wealth is enough to make it one of the world’s top 160 billionaires.
To realize the value of 20.4 million performance options he obtained in January this year, RJ scaringe needs to persist until 2030, and rivian’s share price must rise to $295 per share, about three times its closing price on Wednesday. These aggressive goals mean that many of RJ scaringe’s option awards may never be cashed.
Since musk was awarded a huge compensation scheme in 2018, it has become more and more common for the company’s board of directors to put forward huge potential compensation in front of the CEO to encourage them to bet heavily on future growth. Last year, at least 15 business leaders received stock option awards worth $100 million or more similar to musk.
RJ scaringe holds relatively few shares in the company he founded, in part because he has to raise funds from external investors many times. Musk became rich after selling PayPal to eBay for $1.5 billion, and RJ scaringe once mortgaged his house to raise cash.
Revenue no more than $1 million
In addition to the fleet business, rivian also beat Tesla, GM and Ford with the all electric pickup r1t. According to the prospectus in October, the company plans to launch a 7-seat electric SUV R1s in December.
Rivian CEO RJ scaringe founded rivian in 2009. He received a doctorate from Sloan automotive Laboratory of MIT. The company is headquartered in Irvine, California and has an automobile assembly plant in Illinois. The company says its plant can produce up to 150000 cars a year. Rivian said in the financial documents that about 65000 of them will be r1t pickup trucks and SUVs, and about 85000 will be RCV commercial freight trucks.
But relatively speaking, rivian is still an emerging company and has not yet begun to generate real revenue. Rivian said in its prospectus that it would lose as much as $1.28 billion in the third quarter and its revenue would be between $0 and $1 million.
Rivian has not yet mass produced electric vehicles. It is unclear how fast the company can increase production, especially in the context of global chip shortages and port restrictions, which have plagued carmakers this year. Rivian stated in its S-1 filing that the company has a backlog of orders for 55400 r1t and R1s from North American customers and plans to deliver these vehicles by the end of 2023.
The new bill waiting for President Joe Biden to sign will provide $7.5 billion in federal funding for the construction of a national network of electric vehicle charging stations, from which rivian may benefit. RJ scaringe stressed that rivian’s vehicle is an ideal choice for people who are adventurous and love outdoor activities. Therefore, the company will set up charging stations in remote areas, such as states or national parks.
As of the end of June this year, rivian had 6274 employees. Recently, Laura Schwab, a former executive of the company, sued rivian, accusing the company of having a “toxic Brotherhood” and wrongly terminated her work in the company, so that she “lost millions of dollars of undistributed equity on the eve of the company’s IPO”.
There is a huge gap with Tesla
Although rivian raised nearly $12 billion in the initial public offering of the Nasdaq composite index, there is still a huge gap compared with Tesla. Like other electric vehicle startups, rivian’s goal is to take advantage of the growth in demand for zero emission vehicles to compete with market leader Tesla.
1. Market value
Tesla, founded in 2003, is currently the world’s most valuable carmaker, but Tesla’s share price recently fell after musk asked Twitter users whether he should sell 10% of the company’s shares. Although Tesla briefly fell out of the club with a market value of $1 trillion on Wednesday, the stock rebounded and is now worth $1.05 trillion.
Rivian was founded in 2009 and made an initial public offering (IPO) on NASDAQ on Wednesday, with an initial market value of nearly $100 billion. GM is about $87 billion, Ford is about $79 billion and lucid group is about $70 billion.
2. Global sales
From January to September this year, Tesla delivered more than 600000 vehicles. Once the other two plants under construction are put into operation later this year, sales will rise further. Tesla’s revenue in the third quarter increased 57% year-on-year to $13.76 billion. Rivian has just started selling its first model r1t pickup truck.
3. Assembly plant and employees
Tesla has assembly plants near Fremont, California and Shanghai, and is building factories near Austin, Texas and Berlin, Germany. By the end of last year, Tesla had nearly 71000 employees worldwide. According to wade Bush securities, by the end of 2022, the annual production capacity of Tesla’s two existing plants will reach 1 million vehicles. Once the two new plants are put into operation, the production capacity will double.
Rivian has an assembly plant in normal, Illinois, with an annual output of 150000 vehicles and will expand to 200000 vehicles by 2023. The company said it would build a second factory in the United States and eventually plan to add factories in China and Europe. Rivian currently has 9500 employees. Rivian also revealed that the company’s goal is to produce at least 1 million cars a year by 2030.
Tesla’s model 3 is the world’s best-selling electric vehicle. It also provides model s sedan, model x SUV and model y crossover. The company plans to eventually launch electric pickup cybertruck, second-generation sports car and 8-class heavy electric truck semi.
Rivian currently produces r1t pickup trucks in Illinois and will soon add R1s SUVs and delivery trucks for its largest shareholder Amazon. The company said that by 2023, other models other than R1 platform will also join in, including low-cost models. In addition, the company also plans to add other commercial vehicles to Amazon trucks.
Tesla has adopted more independent production and vertically integrated battery production and autopilot chip design.
Rivian reached an agreement with Amazon to provide 100000 trucks to Amazon by 2025. Amazon owns 20% of rivian. In addition, Ford, another major shareholder, has repeatedly said that its investment in rivian is of strategic significance, although the company previously cancelled the plan to produce Lincoln SUV on rivian platform. Rivian also plans to vertically integrate battery production. (reviewed by Tencent technology / Jinlu)