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Tesla rival Rivian is worth more than $100 billion

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Investors are storming for the electric pickup manufacturer on Nasdaq. The dreamers of a Tesla scenario signed up for the largest IPO of the year, worldwide.

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Rivian closed the first day of trading 29 percent higher at $100.73 on Wednesday. On the second day of trading, Rivian opened another 8 percent higher to $109.68.

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To say investor interest was high seems to be the understatement of the year. Initially, the price range was 57 to 62 dollars. The accompanying investment banks later increased it sharply to 72 to 74 dollars. So eventually the offering price was spiked above the top of the raised fork at $78.

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The result: With the 153 million shares offered, the twelve-year-old project of MIT alumnus Robert (‘RJ’) Scaringe is raising nearly $12 billion (10.3 billion euros). Rivian thus signs for the largest IPO of the year worldwide, and the largest IPO since Facebook’s in 2012.

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Investors value the Amazon and Ford electric pickup truck builder at $93 billion. In full euphoria, the stock market value even touched USD 104 billion on Wednesday. The Wall Street Journal business newspaper notes that the Rivian bankers on the roadshows purposely compared it to Tesla

. An argument that clearly caught on, although Rivian is much less advanced than Elon Musk’s company.

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Tesla delivered over the last four quarters finished more than 800,000 cars and generated nearly $3.5 billion in net profit on $47 billion in revenue over the same period.

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Rivian, on the other hand, only delivered its first cars this fall. According to it prospectus as of October 31, exactly 156 units of the R1T model, almost all of them to our own employees. In the first six months of 2021, there was no turnover and a loss of just under $1 billion. This is due to the start-up costs for the R1T, a seven-seat SUV. By the end of this year, the factory in Normal, Illinois, 1,200 pickups should be rolled off the production line. Amazon ordered 100,000 trucks in 2019 and they are expected to be delivered by 2025.

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However, the financial data seems to be of secondary importance in the story. Fomo seems more important to large investors: fear of missing out. They are rare, the investors who have made just about the entire stratospheric climb of Tesla (see chart) experienced. One of the few is the Scottish group Baillie Gifford, courtesy of administrator James Anderson. And so no one wants to miss the train as potentially ‘the next best thing’ is buzzing towards Nasdaq.

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A number of investors may also switch away from ‘the first best thing’, in other words Tesla. The electric car pioneer tumbled 12 percent on Nasdaq on Tuesday. Elon Musk caused a shock by indicating via a Twitter poll last weekend to sell a tenth of his pieces.

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Scaringe can also become super rich

Founder RJ Scaringe has a 1.7 percent stake in Rivian, worth $1.5 billion. That is little compared to Elon Musk’s 17 percent stake in Tesla. So there is a big difference between the two. Musk was already a billionaire when he started Tesla thanks to the sale of Paypal. Scaringe, on the other hand, as a young entrepreneur gave his house as collateral to get cash. Over the years, he also had to be constantly diluted with each new round of capital. Yet Scaringe can also potentially become a multi-billionaire. In addition to his stock, Scaringe also has options that could potentially be worth $10.2 billion, which would put his total net worth at $14 billion, according to Bloomberg’s calculation. Most important condition for the multi-billion dollar package: staying in work until 2030 and a share price that rises to $295 (or three times more).

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