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Rivian Automotive, the California electric auto upstart, has filed paperwork with the Securities and Exchange board of directors (SEC) to come to be a publicly company. In one SEC filing on Nov. 1, Rivan discover it was targeting a valuation above $60 billion in its early public providing (IPO) following week, v shares priced in between $57 and also $62 a piece.

This valuation would certainly make the company only slightly less valuable than market stalwarts basic Motors (GM) and Ford motors (F). That’s an superior feat because that a new IPO, but what’s yes, really driving Rivian is expansion like electric auto powerhouse Tesla, in ~ (TSLA), which has actually seen the valuation shoot up from about $75 exchange rate at the end of 2019 to much more than $1.1 sunshine today.

The promise of meteoric expansion is irresistible because that potential Rivian IPO investors. But keep in mind, splashy IPOs are never ever a certain thing. The EV an are alone is littered with the wreckage that failed carriers that promised to assist solve climate change and make you rich along the way.

Remember Nikola Corp, i m sorry sought to come to be the Tesla the 18-wheelers? Founder and also ex-CEO Trevor Milton was recently indicted because that fraud through a federal cool jury because that lying about “nearly all facets of the business.” Rivian is no Nikola, yet IPO investors should constantly do their homework.


Is the Rivian IPO the next Tesla?

Tesla has rocketed come ever-higher price in current years at the very least in part because that cars ended up being so cool. Not just did the owner that a Tesla design S show themself to it is in someone that cared around the atmosphere (despite questions about how green Tesla yes, really is), yet the vehicle itself looked great.

With the R1T and also the R1S models, Rivian is aiming to do pickup trucks and SUVs what Tesla did with sedans. Pricing that both models starts roughly $70,000, and also each attributes a base driving range of much more than 300 mile on a complete charge. Simply as importantly, they’re being advertised in the “Built Ford Tough” mold: Glossy videos reflecting the vigorous vehicles vying v the elements, even if it is desert sand or hill snow.

The hope is that mass well-off truck shoppers won’t be able to get enough of Rivian. Remember, the Ford F-150 is and also has to be (seemingly forever) the best-selling auto in the country. In fact, the height six automobiles in the U.S. Through sales room either pickup trucks or SUVs.

In addition, Rivian will have the included benefit of, prefer Tesla, offering their trucks directly to consumers quite than going through a classic dealership model. That means no bleeding of revenues to any kind of middlemen.

This has actually whetted investor appetite, through Rivian newly raising $2.5 exchange rate from the likes the T. Rowe Price (TROW) and Amazon Inc. (AMZN)—the last recently got a 20% stake in the company and has already ordered 100,000 devices for delivery by the end of 2030.

Rivan IPO faces a crowded EV Market

Rivan is solid the just auto manufacturer aiming to edge the EV truck market. And amongst Rivian’s toughest rivals is one of its optimal investors: Ford Motors.

Ford will start selling one EV variation of its famed F-Series pickups in 2022, named the F-150 Lightning. Lot like the R1T, the model likewise has a 300-mile range but dead a price tag that’s $30,000 much less than Rivian’s. It’s already garnered an ext than 120,000 reservations since its debut in may while Rivian is still making itself well-known to the basic public. (For will additionally net roughly $900 million once Rivian walk public.)

“Ford’s manufacture of a full-size pickup shows how serious the firm is about BEVs, as this segment is the lifeblood that the agency at around 1 million systems a year,” provided Morningstar analyst David Whiston after Ford’s might investor day. “CEO Jim Farley stressed the Ford will certainly not give up its management in trucks together it move to BEVs.”

Tesla’s not specifically going to role over and also forgo the most valuable slice of the auto market, either. It’s to be working hard to perfect its own outlandish pickup van model, the aptly named Cybertruck, i beg your pardon looks like something the end of a foolish Max movie. Consumers are an extremely interested in the Cybertruck; it has a report reservation backlog of roughly 1.3 million. The cheapest alternative is stated to it is in priced at around $40,000.

Throw in the likes of basic Motors (with all-electric Silverados and also Hummers), and Rivian will have actually a hard road to climb.

Should friend Invest in the Rivian IPO?

Even in the rosiest Tesla-like scenario, it can be a lengthy time before a bet on Rivian payment off.

Tesla’s share price, for instance, bounced in between $30 and $75 for many of the 5 years leading as much as 2019. Though its stock now clocks in at end $1,100 per share, skeptics about the company’s viability abounded, and short sellers target the stock, betting versus its success. Investor who organized on confronted massive skepticism whether they would end up owning one most an important companies in the civilization or (relatively) unsecured shares.

Recent big-name IPOs have likewise been grounding in purgatory. Because that instance, Coinbase (COIN) has suffered with disappointing returns due to the fact that going public in April, if the S&P 500 has actually returned more than 20% so far this year.

Rivian will certainly inevitably confront growing pains together a publicly company. No one will certainly be driving roughly in a Rivian truck till late 2021 or at an early stage 2022—a date that has been driven back more than once already and may be prolonged again together the company sorts through the it is provided shock led to by pandemic lockdowns. Nor has the company gathered its own charging network.

Say what you want about Tesla’s boffo sector capitalization, yet you actually see folks riding roughly in them and also parking in ~ Tesla-branded charging stations.

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That means investors have to be clear-eyed, patient and willing to reduced losses need to Rivian fail to launch together expected. Or you could wait till Rivian becomes large enough to warrant consists in the S&P 500 and buy it with a passively indexed, low-cost fund.