Shares of companies that produce cars are becoming more and more popular. For example, last year, the leader in demand for assets in this area was Tesla. This company has left its competitors far behind, but Elon Musk is not even going to relax. In recent years, there have been significantly more players in the market in this area, they do not have such high profits, but no less outstanding prospects.
One of such notable companies is Rivian. This is a large enterprise for the production of electric cars, founded in 2009. At that time, the company's products were of little interest, since undeveloped technologies and the minimum service life of car engines did not make them attractive in the eyes of the consumer. Automakers were increasingly paying attention to contact engines. Today, the actively developing Rivian is preparing its IPO for the end of 2021. According to the forecasts of experts from Amazon, Ford and Cox Automotive, from which Rivian has already received support, the issue of the first block of shares of the latter will be a real event.
Today, the situation in the field of "green energy" has changed dramatically. The companies are actively searching for an alternative fuel to hydrocarbons, and the electric fuel fully meets the quality and environmental requirements. Rivian cars are popular today. Take, for example, the case of a flight into space on his own spaceship, Joseph Bezos. It was in the Rivian car that the astronaut arrived at the cosmodrome. It was precisely because of the growing popularity of the company that it decided to issue shares for the first time.
The plans to capture the market from the management of Rivian are really impressive. First, it is important for them to "capture" the US market, and then – the world market. In the last few months, the company has begun to actively increase production in the United States. By the end of the summer of 2021, it was announced that the construction of new production facilities on the territory of America would begin, since the only plant functioning normally in the state of Illinois is no longer able to cope with the volumes.
Amazon and Ford have already invested $2.5 billion in Rivian. In 2019, a landmark deal took place, as a result of which a large investor placed an order for the company to produce 100,000 cars until 2030. As you know, this is not the first financial injection. In 2019, investments in the company amounted to $10 billion.
How far is it to Tesla?
For quite a long time, the shares of Tesla have been growing in price at a cosmic speed. For the most part, this is due to the qualified marketing department of the company, and to no less extent – the charisma of Elon Musk. Plus, the car itself causes a storm of delight.
Absolutely aware that Tesla is still very far away and for a long time, the Rivian company is doing everything to keep the bar for the quality and exterior of its cars at a decent level. So the R1T and R1S models, the price of which starts from the factory from 70 thousand dollars, according to the majority, should become what its sedans did for Tesla. The range of miles of cars is 300 miles when the battery is fully charged. The company has a really well-advanced marketing component, which will allow it to become noticeable on a global scale very soon.
In addition, just like with Tesla, you can only buy Rivian cars directly from the manufacturer. This is an additional plus for both the buyer and the concern, since the profit remains completely with the company, and there is no need to share it with dealers. For the buyer, this also has its own advantage – a strictly reasonable price and guarantees. This state of affairs is very appealing to investors who are looking forward to the release of the first shares.
A little bit about the Rivian IPO
Only today, having reached certain heights in its own field of activity, Rivian decided to issue shares. The company plans listings a few weeks before the release of the first electric pickups. If experts estimate the company at 70-80 thousand dollars, then it may well become one of the most expensive in the world.
Rivian management chose a standard and reliable IPO scheme, abandoning SPAC. The latter works dynamically, bringing the company to the world stage very quickly. However, many enterprises, including Nikola, Lordstown Motors, very soon faced a lot of financial problems, and they were also suspected of providing investors with implausible information. A convenient IPO will allow the company to fully control its business.
Do I need to invest?
In the event that Rivian ever repeats the fate of Tesla, it will happen very soon. For too long a period of time, Tesla confidently holds the leading positions, which it is not going to give up. For a very long time before the start of the victorious march, Tesla shares were worth from $30 to $70. Today, this figure is $700. Many analysts believe that this is an inflated figure and is purely speculative. Very soon, asset owners may be disappointed by a sudden drop in the price.
If Rivian follows the same hype path as Elon Musk, there is no point in investing in assets. And it is not at all a fact that after the issue of shares, the company will continue to show decent results. For example, the recent IPO of Airbnb. After that, the company showed 6.3% growth compared to more than 20% of the S&P 500 index.
Rivian's growth problems are inevitable after the company acquires public status. The release dates of the cars may be moved, and the logistics chain of America after the pandemic is in a deplorable state. There will also inevitably be a list of problems associated with the need for your own network of charging stations. All this and much more suggests that investors will just need to be patient and be prepared for the downsides for quite a long time.
Read more: How to participate in an IPO