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Rivian begins trading on Nasdaq after massive IPO

Rivian IPO Nasdaq Scaringe
Lyndon French
/
Rivian
Rivian founder and CEO RJ Scaringe with an R1S sport utility vehicle at the LA Auto Show reveal in 2018.

Five years after first appearing in Normal as a mysterious startup, the electric automaker Rivian on Wednesday started a new chapter as a publicly traded company.

Rivian began trading Wednesday on the Nasdaq under the ticker symbol RIVN. While initially priced at $78 per share, the stock opened at $106. It closed the day at $100, up 29%. That puts Rivian's market value at about $86 billion — comparable to far more established automakers like GM and Ford.

Rivian founder and CEO RJ Scaringe rang the Nasdaq opening bell Wednesday morning from the company’s Normal manufacturing plant, surrounded by hundreds of workers.

Scaringe said he started the company 12 years ago by himself. Now Rivian has 9,500 employees, including over 3,400 in Normal. He praised the team and its ability to collaborate.

“We’ve got a lot in front of us. We’ve got a big climb. There’s a lot to do,” Scaringe said. “We’ve just launched the R1T (pickup). We’re about to launch the R1S (SUV). And, of course, the commercial van. For me the most enjoyable part of what we’re doing is working with such an incredible team.”

The initial public offering (IPO) will raise $11.9 billion in funding for the company, which is in the middle of an expensive production ramp-up in Normal.

"What we're looking at today is our launch products. But making sure we have the capital to continue scaling the business, building additional production capacity for future products, continuing the development of those future products, along with the technologies, is really key," Scaringe told Bloomberg on Wednesday.

Rivian’s IPO is one of the largest in history, despite only having produced a few hundred electric vehicles since the start of production in mid-September. It’s an indication of how investors are, in general, valuing EVs—widely perceived to be the future of transportation.

Rivian ended Wednesday with a market value of about $86 billion. By contrast, Ford’s market cap (the market value of a publicly traded company's outstanding shares) is around $77 billion, and GM’s is $86 billion. They produce far more vehicles than Rivian. EV leader Tesla’s market cap now tops $1 trillion.

“Remember: Markets are based on sentiment, and it’s based on what investors want,” said Abhishek Varma, an associate professor of finance at Illinois State University’s College of Business. “So, the traditional automaker model clearly does not have as strong a desirability amongst investors today. Nevertheless, I would not count out Ford, GM, and Volkswagen. … They’re making the transition. The likes of Rivian, Tesla and Lucid are only pushing these traditional automakers further toward electrification.”

The short-term expectations on Rivian aren’t going to be sky high, Varma said. Rivian has said it doesn’t expect to be profitable “for the foreseeable future,” and that’s not uncommon in the EV world. It took 18 years for Tesla to turn a full-year profit, which it finally did in 2020.

“What (investors) are looking for are snippets that strong execution is in place,” Varma said.

For Bloomington-Normal residents, Rivian is one of the first publicly traded companies with a major local presence; you can’t buy stock in State Farm or Illinois State University. Some in Bloomington-Normal may feel compelled to buy some Rivian stock, given that local connection.

“If you have to, dip your toes, but don’t bet your bank account on an IPO. In general, IPOs do not outperform the overall market. Not that I’m saying don’t go buy Rivian if you want to. But don’t break your bank for it,” Varma said.

Rivian will make its electric vans, trucks and SUVs in Normal. It’s become one of McLean County’s Top 3 largest employers almost overnight. Samsung, which is Rivian’s battery supplier, is reportedly considering building a battery plant in Normal too.

Rivian previously garnered private investment from companies like Ford and Amazon. It’s making 100,000 electric delivery vans for Amazon, which has a 20% ownership stake.

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