Business Insider IPO recommendation article - don't buy at target price says equity research firm

[TessP100D]

I agree except that Tesla went thru difficult years and then demonstrated that they can execute on their growth path... before reaching this crazy valuation multiple

And Tesla almost went BK too.

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[jjswan33]

Maybe so, but let’s all remember, Rivian hasn’t proved anything at scale yet. It’s could all come crashing down on them too.

Maybe you misinterpreted. That is what I think the valuation is based on, don't think it is justified until they can prove they can deliver on other revenue streams and frankly the deliveries as well.

 

[TessP100D]

I avoid investing in IPOs. Unless I, or my wife, is an insider where we can honestly evaluate a company's potential from the get-go. And figuring out an EV company's reasonable valuation in this market is ridiculous. Anyone around for the 90s remembers the flood of new, insanely overvalued internet companies that caught people's imaginations with their vision of the future and near limitless capacity for growth. It steadies our hands in times like these.

If you really like the company, its story and it's capacity for growth in the long term, then wait. Give it a quarter or two, or more, and see how it goes.

There WILL BE bad news. Manufacturing cars is tough. Quality issues, supply chain issues, customer service issues... it's not priced in for the IPO. Rivian executives and underwriters want you to put on the rose-coloured sunglasses.

Now, those executives are facing a wholly unexpected and very public issue that puts into question the work environment they have tried so hard to portray as warm, inclusive and fair.

This is just my opinion and I don't expect anyone to be particularly moved by it. My wife and I continue to hold our R1T reservation, for now, with a sharper eye on the company's progress. But, we have no intention of buying Rivian stock. Not yet.

Well said.

 

[buddha2lotus]

For me, a stock like Rivian or Tesla is not simply an automaker stock, I see them more as tech stocks than anything else. In the long run, both can be so much more than just making cars that people like and buy. The lofty valuations are really based on what they can potentially bring to a much wider market hopefully in the not too far distant future, such as a breakthrough in battery technology, true self driving for the masses, etc. Otherwise if their respective stock value is based solely on the cars they make, then for sure they are truly way overpriced because they would just be another Ford or Honda.

 

[jjswan33]

In other news, there are going to be a lot of frustrated employees that were given Restricted Stock Units at the promise of an $80b valuation (3.5-4x last rounds in early 2021) that will be seeing a 25% reduction in their expected pay day. Keep in mind, a lot of employees in their CA offices need to sell substantial amounts of their stock every year to supplement their salary.

I am still expecting that the IPO price will still be raised, unless the bad press suppresses that.

 

[Forager]

I am still expecting that the IPO price will still be raised, unless the bad press suppresses that.

I don’t think it will stray much outside of the S-1 range, if at all. Striking outside that range wouldn’t inspire a lot of confidence with Wall Street investors, though retail may not care.

 

[André]

I am still expecting that the IPO price will still be raised, unless the bad press suppresses that.

Actually, don’t be surprised if the IPO is postponed (like our preorders). The inflow of cash the capital market has to put to work is huge… but the large mutual funds will do their homework before buying this. Hopefully, the underwriters will not dump a large portion of the offering in clueless retail inverstors.

 

[Matt D.]

For me, a stock like Rivian or Tesla is not simply an automaker stock, I see them more as tech stocks than anything else. In the long run, both can be so much more than just making cars that people like and buy. The lofty valuations are really based on what they can potentially bring to a much wider market hopefully in the not too far distant future, such as a breakthrough in battery technology, true self driving for the masses, etc. Otherwise if their respective stock value is based solely on the cars they make, then for sure they are truly way overpriced because they would just be another Ford or Honda.

As for being another legacy automaker - Ford, GM, etc. are strapped with a lot of legacy debt. They are still on the hook for large sums of money for worker pensions. Rivian, especially as a non-union shop, has none of that.

 

[Peter del Rio]

I am reminded often that Rivian is a niche player and therefore does not warrant a $50 billion valuation.

Remember, Tesla was valued at less $2 billion for their IPO and had delivered over a 1000 vehicles.

The real value of Rivian even if it can produce its niche products is the low teens.

Tesla had first mover status even as it was going through proof of concept. Now the whole world is moving to EVs and it will be about economies of scale. Unless Rivian produces a low cost crossover that can compete with the major auto makers EVs, Rivian will stay a niche player and most likely be purchased once their valuation approaches its real value at ~$15 billion.

Don't get me wrong, for me the R1S is the car to own but that doesn't I want to lose money on an IPO or bottom pick when the stock falters.

 

[LoneStar]

What I can't wrap my mind around at this point (on verge of 2022, not 2012) is why Rivian, Lucid or any start-up EV company is being viewed as some kind of prophetic enlightened enterprise that's going to wipe-away traditional closeminded automakers. Clearly the whole global industry has moved past the mindset of "it's just a fad fringe segment - early Tesla days" all the way to saying their corporate strategy is now becoming mostly if not exclusively electric vehicle mfg's inside a decade.

Now, it's easy to see Tesla surviving, even thriving in this global pivot towards EVs. But what fundamentals provide assurances that Rivian (or Lucid, ...) can survive the onslaught by mid-to-late 2020's when nearly every carmaker is strategically and financially "all-in" on EVs? Sure, today's R1 design language and tech features distinguish themselves in the EV landscape. Pretty sure Hyundai or Honda or any other major player - regretfully even future Chinese vehicles sold here - will gladly replicate or approximate the look and feel. Then overwhelm Rivian with massive mfg infrastructure dominance and sheer global presence.

 

[Ryanide]

All the logistical reasons are valid, but as we see from Tesla and Lucid investors are not always basing these choices on logistics. That said it does feel like a huge gamble. Will the IPO price jump and then drop to 25% of the price? If you don’t buy the DSP shares, will the price jump immediately and you lose out? Or, will the price sink and you just overpaid? Regardless, it’s going to be a long a bumpy road for Rivian. On the other hand every financial advisor railed against buying TSLA when it was trading for less the $75/share and I wish that I had listened to my gut and put my bet on what I believe in, rather than listening to logistics. So, what to do… I’m not sure yet, but I believe in Rivian and I think that they have a great vehicle.

 

[Matt D.]

I am reminded often that Rivian is a niche player and therefore does not warrant a $50 billion valuation.

Remember, Tesla was valued at less $2 billion for their IPO and had delivered over a 1000 vehicles.

The real value of Rivian even if it can produce its niche products is the low teens.

Tesla had first mover status even as it was going through proof of concept. Now the whole world is moving to EVs and it will be about economies of scale. Unless Rivian produces a low cost crossover that can compete with the major auto makers EVs, Rivian will stay a niche player and most likely be purchased once their valuation approaches its real value at ~$15 billion.

Don't get me wrong, for me the R1S is the car to own but that doesn't I want to lose money on an IPO or bottom pick when the stock falters.

I don’t think of the company that is first to market with an EDV as a “niche player”. Especially with their relationship to Amazon. Those vans are ubiquitous. If Rivian can just replace all of Amazon’s ICE fleet, they are going to do very well for themselves.

 

[jjswan33]

I don’t think of the company that is first to market with an EDV as a “niche player”. Especially with their relationship to Amazon. Those vans are ubiquitous. If Rivian can just replace all of Amazon’s ICE fleet, they are going to do very well for themselves.

I don't think Rivian is first to market with the EDV. For example:

https://www.fleet.ford.com/showroom...id=AL!2519!3!523259147666!e!!g!!ford etransit

https://www.fiatprofessional.com/e-ducato-electric/range (This is coming to the US market next year as a EV ProMaster)

 

[André]

If Rivian can just replace all of Amazon’s ICE fleet, they are going to do very well for themselves.

Tesla is selling 100,000 Model 3 to Hertz at the same margins than its retail customers. I would bet Amazon EDV have a much lower margin for RIVIAN than the R1T and R1S. Any informations on this in the S1 ?

 

[Matt D.]

I don't think Rivian is first to market with the EDV. For example:

https://www.fleet.ford.com/showroom/commercial-trucks/e-transit/2022/?searchid=13188950560|124049466393|1129724147224|&ef_id=Cj0KCQjwrJOMBhCZARIsAGEd4VEmj0Z5JMVCYtYWTXJNJkWfK0V5g2m3TAMfGJHnfBpQZv-NQLLesXUaAiFBEALw_wcB:G:s&s_kwcid=AL!2519!3!523259147666!e!!g!!ford etransit

https://www.fiatprofessional.com/e-ducato-electric/range (This is coming to the US market next year as a EV ProMaster)

Neither of those appear to be to market (at least in the US) yet.

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