A Dummy's Guide to Investing in Rivian IPO - Day Traders & Investors

Founded in 2009, Rivian Automotive, Inc. is an innovative carmaker of electric vehicles and a provider of automotive technologies. In the latter half of 2021, the business began delivering its R1T pickup truck. The delivery van and the R1S SUV are all under development as of March 2022. By the end of 2023, Rivian intends to have a closed charging network across the US and Canada. 

Learn all about Rivian IPO and how its successful debut fueled financial growth in the market. We cover why traders should pay attention to the one of largest IPOs in history. 

Introducing Rivian IPO

On a “skateboard” framework that may accommodate more cars or be adopted by other businesses, Rivian started developing an electric sport utility vehicle (SUV) and a pickup truck. As part of a collaboration with Amazon, a delivery vehicle powered by electricity is also being developed. 

Rivian’s stock had a highly successful debut on the public markets on Nov. 10, 2021, with 153 million shares being sold at an initial offering price of $78.00. This valued the company at an impressive $66.5 billion and raised nearly $12 billion in financing to fuel future growth. 

The stock opened at $106.75 on Nasdaq under the ticker “RIVN” and ended the day at $100.73, giving the business an estimated value of $86 billion. That is greater than Ford Motor Company’s (F) market value, one of Rivian’s primary financial backers.

Rivian IPO displayed on a mobile device held by financial trader with rising prices near a baxia markets time symbol.

Why Is Rivian IPO One of the Largest Ever?

The Rivian IPO was a resounding success, raising nearly $12 billion and becoming the largest IPO in the United States since 2014. 

Over three trading days, the stock price increased by 21%, outpacing the overall market, which saw little movement during that period. 

This success is a clear sign of investor excitement and confidence in the electric vehicle market, especially for startups that are seeking to develop vehicles that can compete with traditional automakers.

After the debut of Rivian’s shares on the stock market, Tesla’s shares, the most valuable automotive company in the world, fell nearly 3%.  Although both companies operate within the market for EVs, Rivian’s specialty is all-terrain vehicles, while Tesla’s focus is on sedans and SUVs. 

Ford, which had been working on expanding its sales of EVs and had a nearly 12% stake in Rivian, had seen its shares fall by about 1% over the same timeframe. 

With Amazon’s 19% stake in Rivian, the electric vehicle company was set to revolutionize the automotive industry. 

Rivian’s EDV was designed and engineered in collaboration with Amazon, which had placed an order for 100,000 vehicles. This is the largest order ever for EVs, and Rivian is poised to change the way we think about transportation.

Rivian’s 2022 Financials 

The company is still on track to produce 25,000 vehicles this year, despite some supply-chain issues and production slowdowns. In its quarterly report, Rivian lost $1.77 per share. 

However, this is an advancement from the $4.10 shortfall in 2021. It’s difficult to draw comparisons with the prior year’s earnings, although FactSet predicted a loss of $1.41 per share on revenues of $132.7 million in the first place.

While Rivian reported negative free cash flow in Q1, it ended the quarter with a strong cash and cash equivalent position of $16.971 billion. 

The EV startup has seen tremendous interest in its products, with over 90,000 pre orders since May the 9th. Furthermore, it has already manufactured 5,000 EVs, representing a significant increase from the previous quarter.

Rivian earlier revealed that it had manufactured 2,553 electric vehicles and delivered 1,227 of them. The EV maker has an RS Rating of 5 out of a best-possible 99. 

Institutional investors hold around 35% of its stock. As of March 2022, 771 funds have a stake in RIVN stock. 

Even though its Accumulation Rating is C, indicating an equal amount of buying and selling of its shares among institutional investors, there is still potential for growth for Rivian.

Rivian Increased Its Prices

Rivian has increased the price of its R1T electric pickup by around 17%, bringing the basic price up to approximately $79.975, from the previous price of $67,500. 

The price of the R1S SUV will increase by around 20%, which will bring the new base price up to approximately $84,000 from the previous price of $70,000. All prices listed are reduced by $7,500 to account for the federal tax credit.

The price hikes are applicable to all existing orders. RIVN stock dropped by 25% on the two trading days that followed the announcement of price increases.

Scaringe has stated that the price hikes are the result of growing expenses associated with the components and materials that are used in the production of its vehicles.

The Rivian R1S electric SUV, which had five seats, will also be discontinued. It will only be available in a configuration with 7 seats.

Ford Sells Chunk of Rivian Stock

On May 13 this year, Ford sold 7 million RIVN shares for $26.88 per unit. This comes on top of the 8 million devices that were sold on May 11 of this year. Because of this, Ford’s shareholding has decreased to slightly under 10 percent, which is equivalent to 86.9 million shares. 

As a result of Ford’s stock sales, RIVN share prices have dropped even more. This comes after the struggling EV manufacturer missed its quarterly profits.

The decision made by Ford is not completely unexpected. Several months ago, Ford decided to step down from its position on the board of directors of Rivian. 

In addition, on November 19, 2021, it was announced that Ford and Rivian were canceling their intentions to collaborate on the production of an electric car.

Should You Invest in Rivian Stock?

Deliveries have begun, which indicates that Rivian will soon begin producing income, which will show quick development from an almost insignificant starting point. 

However, it is probable that the Rivian IPO will continue to suffer significant losses for some years. 

Investors will not have a clear buy target for RIVN shares until some type of track record has been established following the Rivian initial public offering.

The most important thing you can keep in mind is that now is likely not the time to buy Rivian stock. The stock dropped significantly after RIVN failed to meet earnings expectations on March 1st.  

At about 27, the share price is much lower than the initial public offering price. It only has an RS Rating of 5 out of a maximum of 99 potential points. 

However, keep a watch on this fascinating electric vehicle (EV) company while it works through problems related to ramping up manufacturing.

Want to Learn More About Rivian and Other Equities?

Baxia Markets is the perfect solutions provider, offering access to free educational and trading resources. It is a great choice for anyone looking to expand their knowledge of stocks, IPOs, Equities, and more

You may browse the learning center for even more topics to strengthen your trading knowledge.

Start placing forex trades with a Baxia trading account

Looking for more?
Explore our Education Center

View our collection of free education resources dedicated to help you become a more informed and confident trader.