Rivian Automotive stock soars on debut, biggest IPO of the year

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Rivian Automotive Inc. went public with a bang on Wednesday, in the largest initial public offering of the year and the seventh largest IPO in the United States in terms of offering size in almost 30 years.

Rivien RIVN,
+ 49.55%
valued its initial public offering on Tuesday night at $ 78, well above its expected range of $ 72 to $ 74 per share, from an earlier range of $ 57 to $ 62 per share. Rivian also increased the size of the offering to 153 million shares, from 135 million. The company raised $ 11.9 billion.

See also: 5 things to know about Rivian

The share’s first trade was $ 106.75 at 1:00 p.m. EST for 10.3 million shares, or 36.9% above the IPO price. It has extended its gains since then, recently trading up 38.5% to $ 108.00.

Rivian, which has big funders such as Amazon.com Inc. AMZN,
-0.91%,
Ford Motor Co. F,
-2.09%,
and T. Rowe Price TROW,
-2.95%
fund, hopes to carve out a niche by offering all-electric pickup trucks and SUVs, the type of vehicles that U.S. residents have favored for decades.

Related: More and more electric vans are entering the market. Who will buy them?

The automaker began selling a limited number of its R1T, a two-row, five-seat pickup truck, in September. It plans to launch an SUV, the R1S, in December. Wider sales of the truck and SUV are expected to start in December and January. Rivian markets its vehicles as “electric adventure vehicles” with prices starting at $ 70,000.

Rivian also plans to make electric delivery vans for Amazon and have its own charging network.

One of the biggest hurdles for Rivian to overcome is the price of its vehicles, said Jessica Caldwell, analyst at Edmunds. In a recent test, the electric van mostly performed as stated, she said.

It also has the advantage of being the first to hit the market, with Ford planning to launch the electric version of its iconic F-150 next year and the Tesla Inc. TSLA,
+ 3.47%
Cybertruck will go into production next year and reach volume production by 2023.

But “the long-term volume expectations for a mid-size truck of $ 70,000 and over are not that high,” Caldwell said.

It will be difficult for Rivian to compete with the bigger and cheaper Ford F-150 Lightning when it becomes available, and the competition will become fiercer as General Motors Co. GM,
+ 2.52%
is also expected to unveil its all-electric Silverado at CES next year, she said.


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