Rivian’s IPO shows investors are still keen on venture-like risks
Public market investors, it seems, are hungry for venture-like risk.
Nowhere is that more apparent than in the IPO of electric vehicle maker Rivian. The company is set to go public on Wednesday after raising an eye-watering $11.9 billion, making it the largest U.S. IPO since Facebook’s in 2012.
Yet, while Facebook (now Meta) posted revenue of $3.7 billion in the year preceding its listing with income of $1 billion, Rivian is getting a valuation of about $66.5 billion—putting it within striking range of legacy carmakers Ford ($80 billion) and General Motors ($85 billion)—with no significant revenue and a loss of $994 million for the six months ending in June.
It’s understandable why investors feel so bullish about the company. The rise of EV company Tesla is certainly one reason. Rivian has also stood out from the crowd because it began delivering its R1T electric pickup truck in September—to positive reviews—beating out Ford, GM, and Tesla. With backing from giants Amazon and Ford, Rivian also has a sizable contract with the former to produce some 100,000 electric, last-mile delivery vehicles by 2030.
But the bottom line remains: Without an actual tally of its revenue, Rivian remains a risky bet in an industry where execution is tricky and costly (Tesla knows this well). Investors it seems are using signs of success in metrics more typically used by venture investors—and that’s the case for more than just investors of Rivian’s IPO nowadays. And while we’ll see how it works out for the stock when it hits the public markets, for now at least, public market investors seem keen on taking venture-like risk for the potential of venture-like returns—mirroring the fact that venture investors too are going earlier and earlier.
This isn’t your grandfather’s stock market. In fact, it’s not even the same stock market from just a decade ago.
CORRECTION! Yesterday’s essay stated that Metromile combined with a SPAC led by Chamath Palihapitiya. The deal was with Insu Acquisition Corp II., a SPAC set up by Cohen & Co. Paliphapitiya led the accompanying PIPE deal.
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