Rivian leaps past Volkswagen's valuation as EV mania rages

Wednesday, 17 November 2021

A five-day rally in the shares of Rivian Automotive has led the electric-truck startup to more than double in value since last-week's trading debut, with its market capitalisation now surpassing Volkswagen.

The stock jumped as much as 14 per cent to US$169.70 in New York on Tuesday, up 118 per cent from the initial public offering price of US$78. That brought the company's market valuation to about US$150 billion, making Rivian the largest U.S. company with zero revenue.

Rivian, which is backed by Amazon and Ford, overtook Volkswagen's market capitalisation of US$139 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.

'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.'

Volkswagen is Europe's largest automaker with about 10 million vehicle deliveries per year, making it the global number two behind Toyota. Volkswagen generates about US$300 billion in revenue annually and targets around US$17 billion in automotive clean net cash flow this year.

A Rivian R1T electric pickup truck during the company's IPO outside the Nasdaq MarketSite in New York.

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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, the R1T, and an electric SUV, the 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 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 flavour 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 15 per cent since Elon Musk did a Twitter poll earlier this month asking voters if he should sell 10 per cent 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.

At one point during Tuesday's trading, Rivian was worth more than almost 90 per cent of S&P 500 companies, including stocks like Goldman Sachs, Boeing, Citigroup, Starbucks and Caterpillar.