Rivian Leaps Past Volkswagen’s Valuation as EV Mania Rages
Rivian Leaps Past Volkswagen’s Valuation as EV Mania Rages
(Bloomberg) -- A five-day rally in the shares of Rivian Automotive Inc. has led the electric-truck startup to more than double in value since last-week’s trading debut, with its market capitalization now surpassing Volkswagen AG.
The stock jumped as much as 20% to $179.47 in New York on Tuesday, before ending the day up 15%, marking a 121% gain from the initial public offering price of $78. That brought the company’s market valuation to about $153 billion at the close, making Rivian the largest U.S. company with zero revenue.
Rivian, which is backed by Amazon.com Inc. and Ford Motor Co., has overtaken Volkswagen’s market capitalization of $137 billion, as investors awash in cash and eager to get into the EV sector now have another stock to invest in, apart from industry trailblazer Tesla Inc.
“It is another sign that froth is creeping back into the marketplace,” said Matthew Maley, chief market strategist at Miller Tabak. “There is still an emergency level of liquidity flowing into the system long after the emergency has passed.”
EV peer Lucid Group Inc. also rallied hard on Tuesday, closing up 24% and eclipsing the valuation of Ford in the process. Lucid is now a $91 billion company, compared to Ford’s $79 billion.
Volkswagen is Europe’s largest automaker with about 10 million vehicle deliveries per year, making it the global number two behind Toyota Motor Corp. Volkswagen generates about 250 billion euros ($300 billion) in revenue annually and targets around 15 billion euros in automotive clean net cash flow this year. The German industrial giant’s stable of brands includes luxury carmakers Porsche, Audi and Lamborghini as well Scania heavy trucks and Ducati motorbikes.
Meanwhile, Rivian, which is developing an electric pickup truck -- R1T and an electric SUV -- R1S, has started delivering some trucks in September, mostly to its own employees. It estimates that annual production will hit 150,000 vehicles at its main facility by late 2023.
EV Mania
The rally since the IPO also makes Rivian’s debut week the year’s best, just ahead of Affirm Holdings Inc., which gained 117% during its first five sessions. This data excludes IPOs that raised less than $1 billion.
EV stocks have seen heightened interest from retail investors in recent weeks, with Rivian, Lucid and Tesla topping Fidelity’s retail trading platform’s list of most bought assets on Tuesday. Still, a recent selloff in Tesla shares could also be turning into a boon for Rivian.
“Rivian has become the EV flavor of the month as investors have no clue if Elon Musk is done selling Tesla stock,” Ed Moya, senior market analyst at Oanda Corp., said. Tesla shares have declined 14% since Musk did a Twitter poll earlier this month asking voters if he should sell 10% of his stake in the company, and followed it up with a string of stock sales.
“Wall Street’s view on EVs is that Rivian has so much more growth potential than what they can get from Tesla,” Moya added, referring to the potential returns from both stocks. Tesla, a more mature company than Rivian, currently trades at a price-to-earnings multiple of 340, while the NYSE FANG+ Index, of which it is a part, trades at about 43 times earnings. For the broader S&P 500 Index, that number is 26.
At one point during Tuesday’s trading, Rivian was worth more than almost 90% of S&P 500 companies, including stocks like Goldman Sachs Group Inc., Boeing Co., Citigroup Inc., Starbucks Corp. and Caterpillar Inc.
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