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UPDATE | Fri, May 6, 2022 | 9:41 am EST
Rivian was one of the most anticipated IPOs of 2021, a record year for initial offerings. This article was originally published before the IPO, addressing the questions of investors who sought to buy pre-IPO or IPO shares.

Rivian went public on Nov. 10, 2021, at an initial price of $78/share, raising close to $12 billion. The stock closed at over $100 on its IPO day and peaked at over $170 on Nov. 16.

It’s easy to buy Rivian stock now: it’s a publicly-traded company and you can place an order through your usual broker. We’ll keep the original order because it’s an interesting case study in pre-IPO investment, and we’ll add an update on the current state of Rivian stock

Rivian After the IPO: The First Six Months

Rivian’s IPO priced at higher levels than expected and quickly surged to over double its IPO price. Since then the stock’s trajectory has been a long downward slide.

Rivian shares are currently (May 6, 2022) trading at $31, well under half their IPO price. The losses have affected other companies: both Amazon and Ford hold large numbers of Rivian shares, and the loss of value has affected both results and stock prices at both companies. Amazon’s Rivian take was almost entirely responsible for AMZN’s losses in Q1 2022.

The rise and fall of Rivian stock are instructive. The products, notably the R1T pickup truck, have achieved near-universal praise. The issue is with production capacity, with supply chain issues preventing the Company from reaching its production targets. Overall market conditions have also turned down, with unprofitable growth companies like Rivian taking the hardest hit.

Rivian held its IPO at a time when enthusiasm for electric vehicle stocks was at a peak, and that enthusiasm was reflected in the company’s completely unrealistic valuation. Rivian had a higher market cap than Ford before it delivered its first hundred cars. That was not sustainable in a market that was rapidly backing away from speculative companies.

There’s no reason to assume that Rivian is finished. The Company still has a huge $18 billion cash hoard and can sustain losses for some time. Its products are highly regarded and well-received. It’s the same company the market adored in Nov. 2021.

It’s worth remembering that Tesla shares cost $17 each at their IPO, fell to under $5, and took well over a year to return to their IPO price. There is no assurance that Rivian shares will follow the same pattern, but the slump in the share price – which could be seen as a return to a reasonable valuation – does not have to be permanent.

What is Rivian?

Rivian is a new entry into the electric vehicle (EV) market. Unlike most EV makers, Rivian targets the SUV, light truck, and delivery van market for its initial product offerings. These vehicles will be semi-autonomous with a range of 400 miles per charge.

Rivian has a 2.6 million square foot manufacturing facility in Normal, IL, and additional locations in Michigan, California, and England. Rivian’s first vehicles should hit the market in late 2021 and 2022 at prices ranging from $68,000 to over $74,000.

Founder and CEO RJ Scaringe holds MS and PhD degrees in mechanical engineering from MIT. Analysts expect Rivian’s vehicles to feature new and highly sophisticated technology.

Many industry experts expect Rivian to offer serious competition to Tesla and other EV manufacturers.

In September 2021 Rivian gave several test drivers an advance look at the Rivian R1T pickup. Overall impressions were extremely positive, with reviewers praising the vehicle’s luxurious interior, off-road performance, abundant power (800 horsepower), and 11,000-pound towing rating.

The R1T offers an all-wheel-drive with a separate motor for each wheel. Separation of the wheels from a central drive train allows maneuvers like the “tank turn”: the R1T can spin on its axis, a maneuver no other pickup can perform.

For more on the pickup’s performance, appearance, and other features, check out this R1T review from Car & Driver.

Rivian R1T and R1S trucks
Rivian R1S Electric SUV & R1T Electric Pickup Truck

When Will Rivian Hold Its IPO?

Rivian moved a huge step closer to its IPO with the public release of its S1 filing on Friday, Oct 1, 2021. The S1 – a formal prospectus required for any new offering of shares – is a key step in the IPO process, providing potential investors with important details on the company and its finances.

Rivian still has not scheduled its IPO or set the terms. Companies often time IPOs to coincide with positive market sentiment, and there’s no way to know when Rivan will schedule its IPO.

Details From Rivian’s S1 Filing

Rivian’s S1 filing provides more information about the company than potential investors have ever had before. Some key points:

  • Rivian had 6,274 employees as of June 30, 2021.
  • Rivian spent $766 million on R&D in 2020 and $683 million in the first half of 2021.
  • The Company had 48,390 pre-orders for the R1T pickup and R1S SUV as of June 30.
  • Rivian had $3.7 billion in cash and cash equivalents as of June 30.
  • Amazon has ordered 100,000 delivery trucks by 2030, with exclusive rights for four years and right of first refusal to buy new units for two years after that.
  • Rivian losses were $1.02 billion in 2020 and $994 million in the first half of 2021, with much of the expense going to building its primary factory and its first vehicles.
  • Rivian will realize its first revenues in Q4 2021.

We can learn two lessons from this. One of them is obvious, the other might not be.

  • First, starting a car company costs a lot of money.
  • Second, Rivian may have backed itself into a market timing corner. The Company will need to stage its IPO fairly soon if it keeps burning cash at its current rate. If markets continue their downtrend, that could force the Company to hold its IPO in a relatively unfriendly market.

The Rivian S1 filing is available online for public viewing. It should be required reading for any potential investor.

Rivian’s Financing 

Rivian has received large amounts of venture capital financing. Amazon led a $700 million investment in Feb. 2019 and has ordered 100,000 delivery vans. Ford added another $500 million and is developing a vehicle using Rivian’s technology.

Conventional venture capital firms are also in on the action. Major players like T. Rowe Price, Blackrock, Soros Fund Management, Fidelity Management & Research, and Baron Capital have all made significant venture capital investments.

Rivian is expected to hold its IPO sometime in 2021 or 2022. Some analysts have predicted an IPO as early as September 2021. Others suggest that the IPO may wait until vehicle deliveries begin. As with all IPOs, the schedule could change according to market conditions.

Based on current financing, Rivian is valued at $27.6 billion. Some sources are predicting a post-IPO value up to $50 billion, which would make the company more valuable than Ford.

The expectation that Rivian’s value could nearly double after its IPO is driving many investors to look into ways to invest in Rivian stock.

Are There Any Concerns About Rivian?

All investments involve risk. Despite the high level of institutional backing and the high buzz levels, there are some potential concerns about Rivian.

  • Rivian hasn’t sold a car yet. Rivian’s entries into the car market are highly anticipated, but there’s no assurance that the market will approve. A few bad reviews or widely publicized failures could affect the company’s prospects.
  • Rivian’s vehicles will be expensive. Initial products will range from $68,000 to well over $70,000. This could limit the market for the products and constrain growth.
  • The competition will be intense. Tesla has dominated the EV market, but many new products will be entering the market at the same time as Rivian’s offerings. 
  • Rivian’s target market may not be receptive. Rivian is targeting the SUV, light truck, and delivery van market, while other EV makers have introduced sedans first. Buyers of pickups and SUVs could be less receptive to EVs. 

All of these risks are speculative. They may or may not have any impact on the company or its value. 

As with any investment, you’ll have to do careful research to determine whether investing in Rivian stock is the best use of your money. Consider discussing your plans with a qualified financial advisor!

How Can I Buy Rivian Stock?

Rivian is a publicly-traded company which means that you can buy Rivian stock through your usual broker.

Rivian is listed on the Nasdaq exchange under the ticker symbol RIVN.

If you don’t have a favorite broker yet, you can find a few suggestions below.

Conclusion

Rivian is one of the most anticipated IPOs of recent years. The company has generated investment from major companies and venture capital firms. This indicates that well-informed investors expect the company to succeed.

Rivian is a privately held company. You cannot buy Rivian shares on the open market. It may be possible to purchase pre-IPO shares or to invest at the IPO, but you’ll have to meet requirements and there may be restrictions. These shares may not be available at all.

If it’s not practical for you to invest in pre-IPO or IPO shares, you can invest directly by buying shares in a publicly traded company that owns a substantial stake in Rivian, such as Ford. You can also buy publicly traded shares after the IPO.

As with any investment, you should consider the risks before buying Rivian stock. Consulting a qualified financial advisor is always worthwhile.

FAQs

What is Rivian?

Rivian is a startup manufacturer of electric vehicles. Rivian’s electric pickup trucks, SUVs, and delivery vans should reach the market in late 2021 or 2022. 

What are Rivian’s Highlights?

Rivian has attracted investment and attention from leading players in the automotive, technology, and venture capital industries. Rivian has achieved an unusual valuation for a pre-IPO company.

How Can I Buy Rivian Stock?

Rivian is a publicly-traded company which means that you can buy Rivian stock through your usual broker.

Are There Any Concerns About Rivian?

Rivian’s vehicles have not yet reached the market. They will be expensive and there is no way to assure that the market will be receptive to SUVs and light trucks in this price range.