Rivian Automative (NASDAQ: RIVN) made its highly anticipated IPO on 10 November and it was a blockbuster. The electric vehicle start-up raised $12 billion and has already reached a market capitalisation larger than Ford and General Motors. It was also the biggest US IPO since 2012 when Facebook became public.

The debut shares were originally priced at $78 but rocketed ~50% before ending their first trading day up 30% at the ~$100 mark. Rivian is currently up another ~20% on their second day so far.

Too risky?

Investors are piling into the fast-growing EV market, as they look to find the next Tesla trade. Rivian is pitching their product line as different in that they focus on electric trucks and SUVs rather than the Tesla sedans. However, the valuation is eye-watering, especially as the company has no real revenues and has only just started selling vehicles as pre-orders. Whilst there is undeniable potential in this industry currently in disruption, it is important to highlight that this company is yet to be tested commercially.
Rivian has racked up losses of $2 billion since 2020 and has delivered ~50 vehicles so far. It has a target of 1000 deliveries by year-end.

Vote of confidence

Whilst this is a high-risk play, Rivian can count on the support of two giants. Amazon is Rivian’s largest shareholder with a 20% stake. As part of the agreement, Rivian is developing delivery vehicles for Amazon, which could prove to be a lucrative client and partner. Ford is another major name and shareholder with a 12% stake, despite being a direct competitor.

Overall, there is no denying the potential opportunities within the EV market right now, as more and more governments and consumers are making the move towards sustainable choices, including electric cars. If Rivian is able to follow the path paved by Tesla and execute its plan of ramping up commercial production and sales, this stock could be a gamechanger in your portfolio in the coming years.    

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