Rivian raises IPO to $78 per share, company valued at $66.5B

Yahoo Finance Live anchors discuss Rivian going public and raising its IPO price to $78 per share.

Video transcript

JULIE HYMAN: Let's talk about Rivian in the meantime, because this company is coming public today in a big way. The valuation estimated for Rivian could be more than $77 billion. On a fully diluted basis, closer to $67, $68 billion, whatever way you slice it. We're talking about $78 a share is where the reporting says these shares have been priced. Expected to raise almost $12 billion. This for a company, by the way-- I mean, you're not walking around seeing Rivians drive around. There are a number of preorders, according to the company, that it expects to fill going through 2023.

But still, this is, effectively, a pre-revenue company. And it's just a fascinating one. Obviously, a lot of big backers here, Amazon, Ford, a number of other big investors who have said that they have committed to buy shares at the IPO price. But, certainly, this is an eye-popping situation.

And, Sozz, I don't know if this says more about sort of the easy money environment, if it says something about the risk appetite in general, the risk appetite specifically for EVs in this very hot environment for that sector, or-- I don't know, maybe all of the above.

BRIAN SOZZI: Well, I think it says a lot about a sexy story and the ability of this company to sell that sexy story to the street. I mean, you have the founder, RJ Scaringe. I mean, he talks about in the prospectus, he was tinkering with cars, building them out of his garage as a kid, says he had hoods for cars underneath his bed. I don't know if he was joking, but he does talk about it in the prospectus here.

So, you have a very interesting founder here. Secondarily, you mentioned those Amazon orders. Not only is Amazon a key investor in this company, they have also placed orders for 100,000 electric vans from Rivian that will be delivered at some point in the future. Unclear when all those 100,000 vans will be wearing Amazon branding and going out on the road. Very unclear.

But, Julie, despite the sexy story here, bottom line is 2019, 2020 through the first six months of this year, Rivian has lost $2.5 billion. They're unlikely to make any money any time soon. They only have a couple of their cars or trucks in the hands of employees right now.

So, by no means is this company mass producing vehicles. And they're going to come out of the gate maybe with a valuation, $70 billion, let's say, it closes on the first day of trading. Ford's market cap is $80 billion here. The market is essentially saying Rivian is going to dominate the truck market for the next decade.

Well, news flash to those investors, you have Ford out there making very good trucks, and then also pivoting hard to the Ford F-150 electric truck. And that is even excluding General Motors, with its $85 billion market cap, basically making an aggressive push into electric vehicles. There's a lot of expectations built in here, guys.

EMILY MCCORMICK: Well, there are a lot of expectations and a lot of competition here. And, Julie, I think to your original question, there just has been so much of a lofty valuation that's been attributed to so many of these companies that have said that they'd be pushing more heavily into the electric vehicle and the electric trucking space, specifically.

And, Brian, you were running through some of those eye-popping losses here, and the company is expecting to record a quarterly net loss of as much as $1.3 billion in the current quarter because of cost associated with starting production of that R1T electric truck here.

So, again, this is a company, as we've been talking about, that is in a sort of pre-revenue stage. It is booking these massive net losses here. We're not likely to really be seeing these on the road for the next couple of years. And there just is a tremendous amount of optimism that's been baked into this valuation, the price of this stock at its IPO, and likely where it's going to begin trading today, as well.

And then just one other quick note here, kind of on a different tangent, but one thing that I found interesting about this IPO is that the company will be allocating up to 7% of its shares to eligible US customers who had placed preorders as of September 30. So, I did think that was an interesting sort of marketing strategy here for Rivian trying to really bolster the consumer loyalty to this brand, even as it is in the stage before it's delivering its vehicles to customers that aren't involved with the company.

And it's similar to what we actually saw with Airbnb during its own IPO last year with that company allocating shares to some of its hosts on the platform. So, another interesting detail here just as we think about the structure of this IPO and who's actually able to participate in this as well, guys.

JULIE HYMAN: Yeah. And Emily, the company also courting retail investors up to 4/10 of percent of the shares are going to get allocated to retail. The SoFi's brokerage platform. So that's interesting as well. And RJ Scaringe, the founder of the company who Sozz alluded to, he's going to get more votes, a heavier proportion of votes via a special class of stock, which is not necessarily unusual, just something else about the structure of this company. We're going to continue to follow Rivian, of course, as we track it and it heads to its opening.