Electric vehicle start-up Rivian soars on stock market debut

Rivian, the electric vehicle maker that has yet to record any meaningful revenue, surged on its Nasdaq debut, with an opening market value of more than $100bn, greater than Ford and General Motors, making it one of the biggest initial public offerings in history. The company’s shares began trading at $106.75 per share, 37 percent higher than its initial public offering price and almost four times its valuation in private markets less than a year ago.

That gave it a market capitalisation of $91bn, or $107bn on a fully diluted basis. Before deductions, the company will raise approximately $11.9bn, the biggest IPO haul for a US company since Facebook’s flotation in May 2012. Investors are looking to ride the wave of optimism surrounding companies in the electric mobility and automotive sectors, eager to buy into a company some believe can emulate the success of Tesla, which surpassed a $1tn market capitalisation in October.

It’s the sixth-largest IPO ever on a US stock exchange, according to Bloomberg, and it’s hard to imagine the company picking a better time to debut. Tesla has generated an incredible amount of interest in electric vehicles and is now one of the most highly valued companies in the world. The public markets have also been on an outrageous run over the last few years — a run that was supercharged over the last 18 months by an influx of retail traders and a boom in electric vehicle companies going public.

Rivian’s arrival on the Nasdaq stock market, where it will trade under the ticker symbol RIVN, represents a big payday for Amazon, whose stake at the IPO price was worth $12.5bn. The market environment for the offering has been shaken this week as shares in Tesla, the leading electric-car maker, plunged after its chief executive, Elon Musk, said he might sell some of his stock.

The market’s reaction highlights the sky-high expectations for Rivian, which has incurred almost $1bn in losses in the first half of this year, and estimates it may have lost up to a further $1.28bn in the third quarter. Much of the proceeds from the Rivian IPO will go towards increasing production capacity at its plant in Normal, Illinois, as well as future new facilities.

And Rivian may also benefit from the view in the auto sector that it is well run. Its chief executive, R.J. Scaringe, has a doctorate in mechanical engineering from the Massachusetts Institute of Technology and, so far, has not shown himself to be easily distracted or the source of unnecessary controversies, criticisms made of Mr. Musk of Tesla.

Rivian’s pickup and S.U.V. are focused on well-to-do buyers who like the outdoors. “Keep the world adventurous forever,” Rivian’s I.P.O. prospectus proclaims.

Still, Rivian will face daunting competition, including established automakers that have much experience with mass production. Next year, Ford is supposed to start producing an electric version of its F-150 pickup truck, the top-selling vehicle in the United States. G.M. is expected to soon begin selling an electric GMC Hummer — in both truck and S.U.V. versions — and is working on a Chevrolet Silverado electric pickup.