IPO News: EV-startup Rivian gears up for blockbuster market debut. Here’s all you need to know

After several months of hectic activity, the market is getting ready for one of the biggest initial public offerings of the year. Electric vehicle manufacturer Rivian Automotive, Inc. has revealed plans to go public through an IPO that is expected to value the company around $60 billion. In an official statement, the company this week said it will offer 135 million shares at an estimated price of $57 and $62 per share.

The Irvine-based EV startup, which is backed by Amazon.com (NASDAQ: AMZN), will start trading on the Nasdaq Global Select Market as early as next week under the ticker symbol RIVN. The offering is expected to generate a maximum of around $8.4 billion and will be the third-largest in more than a decade. The group of book-runners will be led by Morgan Stanley, Goldman Sachs, and JPMorgan.

Riding the EV Boom

Rivian is apparently looking to leverage the growing market interest in electric vehicle companies in recent years, a trend evidence by the surge in the value of market leader Tesla, Inc. (NASDAQ: TSLA). The other positive factors include the favorable regulatory environment and the growing demand for trucks and SUVs, which is the focus area of the company’s business.

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As a public entity, Rivian would have to go the extra mile to gain market share and prove its competency to investors. Though the market for electric vehicles is still evolving, the primary challenge facing the management will be competition. It is worth noting that the company is yet to start commercial sales in a full-fledged manner.

Competitive Edge

Pre-orders for the company’s leading pickup trucks and SUVs reached around 48,000 as of September 2021. The all-electric R1T pickup, which was rolled out a few weeks ago, is considered to be a direct competitor to auto majors like General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) in that segment. Having delivered 156 R1Ts by October, the company plans to ship 1,000 more this year.

Meanwhile, plans are afoot to roll out R1S, a seven-passenger sports utility vehicle, by December. The target is to deliver around 15 R1S’ by year-end, mostly through the direct-to-customer channel.

Amazon Power

The company’s alliance with Amazon, which holds a 20% stake in it, should come in handy for strengthening its footprint in the market. The e-commerce giant, which is also Rivian’s first commercial customer, has ordered around 100,000 vehicles, to be delivered over the next ten years. That assumes significance considering the initiatives by GM and Ford to expand into the electric delivery vehicle space.

Founded by Robert Scaringe in 2009 as Mainstream Motors, the company was rechristened to Rivian in 2011. The heavy investments that went into the construction of production facilities and the adoption of technology since then have put Rivian’s liquidity under pressure over the years.

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Read management/analysts’ comments on quarterly reports

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In the six months ended June 2020, Rivian incurred a net loss of $994 million or $9.84 per share, reflecting a sharp increase in operating costs. Since the company is yet to generate revenues on a regular basis, the bottom-line is expected to remain in the negative territory in the foreseeable future.