Rivian is the newest fashion company on Wall Street. The company of American origin debuted last week with a particularly high market capitalization which allowed it, shortly after, to surpass industry giants such as Ford, General Motors or Daimler.
But the situation has not stopped there. Rivian has become in the last hours the third largest car manufacturer in the world by market capitalization, surpassing even the Volkswagen group. Ahead are only Tesla and Toyota.
The action of Rivian has doubled in value from its initial public offering. Initially, 153 million shares were sold at $ 78 each, which translated into an initial valuation of $ 66.5 billion. Almost a week later, those same stocks are trading at $ 150.
The interesting thing about Rivian is that its valuation is based mainly on the promise of being a great company, not in its current performance. The company, in fact, expects to deliver 1,000 units of its vehicles before the end of 2021.
On the other hand, according to S-1 filed with the SEC prior to its IPO, the company posted a net loss of $ 426 million in 2019, a figure that increased to $ 1 billion in 2020. In the first half of 2021, losses were $ 994 million. Most of that money has gone, unsurprisingly in a start-up company, in R&D, as well as in setting up its factory in Illinois.
The company also stated in said document that in September it had 48,390 reserves of its pickup R1T and its R1S SUV (in the United States and Canada). These require a $ 1,000 deposit, but are refundable in the event of cancellation.
Volkswagen’s business figures are far from Rivian’s, despite being worth more on the stock market
Rivian’s figures they contrast with those of other brands that it surpasses on the stock market, like Ford or Volkswagen. However, it is a relatively similar situation to that of Tesla.
The company founded by Elon Musk outperformed Volkswagen in early 2020 in market capitalization, despite the fact that both its income and the value of its assets is lower than that of the German company. Both the ratio that relates the share price to the company’s income and the one that associates the share price with the company’s sales are notably higher than the industry average.
With Rivian, those parameters are even crazier. Of course: the North American company received investments from giants such as Amazon or Ford in the past, which partly supports its credibility in the market.
Whether or not Rivian is capable of meeting the expectations that the market is generating around her is something that only time can determine. What is no secret is that on Wall Street this action is on fire. And all eyes are now on them.