Automobile Company Rivian Hits $100 Billion Valuation on IPO Debut

Rivian Automotive Inc had its stock soaring as high as 53 percent on its Nasdaq debut on Wednesday, giving the Amazon-supported Electric Vehicle maker a market value of over $100 billion. Rivian is now the world’s largest IPO (Initial Public Offering) this year.

At its opening, the Rivian stock closed at $100.73, having an increase of over 30 percent from its initial public offering price. Following this, Rivian is now the second most valuable automobile company in the United States.

It follows Tesla Inc, which is valued at $1.06 trillion and comes ahead of automobile giants General Motors and Ford, which are valued at $86.05 billion and $77.37 billion. This is despite the company having only recently started selling vehicles and having little income to declare.

However, Rivian is having problems maintaining manufacturing in Illinois due to global supply-chain delays. The company stated that COVID-19 and the influence of the pandemic on suppliers delayed the launch of vehicles out of the state in July.

Electric Vehicle (EV) companies have become some of the most promising investments in the past year. At Rivian’s full valuation at its first IPO went over $106 billion, including assets like options and restricted stock units. From the IPO, Rivian was able to raise about $12 billion with the total amount rising up to $13.7 billion, if the full overallotment of shares is exercised.

Overallotment of shares is an option that allows the sale of additional shares which a company plans to issue in an IPO.

This is the largest IPO in the United States since Alibaba Group Holding Ltd went public in 2014.

Rivian founder R.J. Scaringe said in an interview that the company’s transition to public status and growth in the capital gives the company room to generate promising products and growth in terms of the segments and new vehicles that the company will be making.

Two of Wall Street’s largest investors, T. Rowe Price and BlackRock are touting Rivian to be the next big player in a field that is dominated by Elon Musk’s Tesla Inc, despite increasing pressure on automobile companies in China and Europe to reduce their emissions.

The IPO coincides with the United Nations Climate Summit which saw numerous automobile and airline companies, as well as governments, commit to reduce greenhouse gas emissions from global transportation.

Rivian’s largest stakeholder, Amazon.com Inc owns up to 20% of the company.