Sometimes in life the stars line up and the wind is at your back and it looks like there is smooth sailing ahead. In the case of Rivian automotive that appears to be the case. Think about global warming and one of the solutions is to reduce the number of fossil fuel vehicles and replace them with electric. In the days before the shares of the company went public, the climate change conference was going on and leaders from around the world were trying to deliver commitments to lessen global warming. In Washington, the infrastructure bill was passed and part of the money will go towards ensuring more electric cars are on the road.
In an article by Matt Orr of the Associated Press, the electric truck maker Rivian issued shares on the Nasdaq and the value of the shares jumped 53%. The shares closed at $100.73 which meant the market value (number of shares outstanding x market price) was $85.9 billion. That value put Rivian higher than Ford and a little less than GM.
The valuation is stretched because Rivian has produced 150 vehicles, Ford and GM produce millions. Although Ford invested 500 million in the company in 2019, the shares are worth $10 billion. The other large backer is Amazon which held a 20% stake (the shares are worth $17 billion).
Tesla has sold 627,300 vehicles is worth a trillion dollars.
Rivian has 55,400 vehicles in preorder (for $1,000 down payment) and Amazon has placed 100,000 order for delivery vans.
The trucks sell at $67,500 at base price, the SUV is $75,500, there are many other options to add $10,000 plus.
According to Jessica Caldwell of the website Edmunds, said Rivian is first to market on the trucks, but how big is the $70,000 truck market?
Linking to dividend paying stocks, stories such as Rivian are exciting and fun to read, but investing in the stock is high risk. The less riskier way to invest is to buy the major companies that pay dividends and has the supply lines to actually do the job. The big three are protecting their sales and spending billions on the ability to make both fossil fuel vehicles and electric, however once demand comes they will be selling millions of electric. Which of the big 3 you choose is from your research or what type of vehicle you drive. With the big 3, you can also go by the showroom to see if your like their product line.
There are more questions than answers, till the next time – to raising questions.