Rivian, the electric-truck maker, has formally closed its IPO, thanks to a big gain at the end of its first day of trading. Rivian went public late on Thursday evening, offering 22.4 million shares at a price of $21 per share. The IPO was priced a hair under the midpoint of the proposed range of $20 to $22 per share, valuing Rivian at $743 million, or $6.3 billion when considering the proceeds from the offering.
Early on Friday, Rivian’s shares popped more than 72% on the first day of trading, closing at $35.34 apiece. The company’s shares gained as much as 133% on the day. Shares of Rivian are now up close to 200% since the company’s opening day on the NASDAQ exchange. In an interview with Reuters, Rivian CEO Alex Tavares asserted that the strength of the stock’s performance could be explained, in part, by people who bought into the stock on Thursday night’s open having a little bit more cash.
Rivian’s IPO price was about what the company had originally expected, and the stock began trading on Thursday after its pricing. The $21 IPO price represented the bottom of Rivian’s projected range, and with Rivian having raised $325 million from the IPO, it’s clear that the company has enough cash to get the next few years off to a good start.
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With all of this rosy news, one might think that Rivian’s stock surge is the result of short sellers cashing out to cash in on a short squeeze, as some brokerages have advised. But Reuters and the company say that the stock’s performance was driven by many loyal buyers on opening day.
The Rivian stock jump doesn’t necessarily mean that we’re in for a big boom in the electric-truck sector. While Rivian’s F1 is an electric-powertrain vehicle that could prove exciting, the F1 is something of a Rorschach test for investors. On one hand, it’s a high-design, radically efficient SUV that will be produced in relatively small numbers. And the vehicle’s electric engines will essentially plug into a standard 110-volt outlet, so it won’t require an expensive and costly AC or DC charging system. And there’s an option to install a “range extender” battery pack that could give the F1 a 250-mile range, basically doubling the vehicle’s range.
On the other hand, Rivian’s F1 costs $260,000, so this isn’t exactly a mass-market vehicle that’s destined to become the next Prius. Much of Rivian’s orders are probably solid aspirational buyers — folks who think that electric trucks will provide a convenient and efficient alternative to their gas-burning vehicles. But about one-quarter of Rivian’s orders are orders for vehicles that will be assembled in Rivian’s factory in Thailand, and Rivian’s high prices mean that the vehicles won’t be available for consumer purchase until 2022. That’s actually two years later than those other F1 makers, Tesla (NASDAQ:TSLA) and Daimler’s (NASDAQOTH:DDAIF) Freightliner, have targeted for their own EV vehicles.
At this point, as Tesla prepares to unveil its first production-ready EV vehicle next week, I’m going to be skeptical about the idea that Rivian or any other EV manufacturer is going to make a big dent in the market for long-haul trucks. Tesla’s offering, at least, shows that the automaker is committed to making the EV a reality. But let’s see if the Tesla can deliver a vehicle that’s compelling enough for buyers.