Rivian buyers don’t have their cars yet, but a tidy profit from the IPO may have consoled them

November 11, 2021, 2:56 PM UTC

Rivian buyers don’t yet have the vehicles they ordered, but some of them made a tidy profit from the EV startup’s Wednesday initial public offering—alongside freshly minted billionaire founder, RJ Scaringe. 

That’s because the Irvine, Calif., company set aside up to 7% of its blockbuster IPO for a directed share program, when shares in an offering are reserved for sale to employees, executives, and others connected to the company—and in this case, to customers as well. 

Anyone who placed a valid deposit of $1,000 by Sept. 30 to preorder one of the startup’s two electric-vehicle models—without so much as a test drive—could purchase shares at the subscription price of $78 each. 

Typically this discount is reserved for professional money managers, many of whom look to quickly flip the stock after the initial pop at the opening. 

Those lucky enough to sell at Wednesday’s high of $119.45 would have pocketed a gain of more than 50%, but even those still holding onto their shares Thursday, when the stock opened around $110 a share, could enjoy a profit of more than 40%.  

A spokesman for Rivian did not offer immediate comment on the number of customers who took the company up on its offer nor how many shares they may have bought.

Future owners will still have to wait for over a year in some cases before they can take delivery of their car, however.

Ineligible for S&P index

Those who didn’t lodge a reservation for the high-spec launch edition of either the R1T pickup truck or R1S SUV will get their vehicle in January at the absolute earliest, as Rivian expects to deliver only roughly 1,000 vehicles this year.

According to the company, in which Amazon owns an 18.9% stake, it has collected 55,400 deposits and expects to fill all these orders on backlog by the end of 2023. 

Rivian raked in $11.9 billion in gross proceeds from the IPO, the year’s biggest worldwide, before a potential greenshoe option that could see a further 22.95 million shares sold in the coming 30 days.

Following the IPO, Rivian’s 38-year-old founder, RJ Scaringe, can call himself a billionaire thanks to his 17.6 million Class A and Class B shares, worth nearly $1.8 billion in total. This doesn’t include options for a further 31.4 million shares.

The Class B shares confer 10 times as many votes and are entirely controlled by Scaringe, giving him a total voting stake of 9.5%, but they do come with a downside for investors: The dual class ownership structure makes Rivian ineligible for inclusion in the S&P 500. 

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