Is It Better to Buy Electric Vehicle ETFs Than Rivian IPO?
The market is abuzz with the high-profile Rivian IPO that is expected to hit this week. However, some analysts are skeptical about the valuation of the IPO.
The market is abuzz with the high-profile Rivian IPO that is expected to hit this week. The Amazon-based EV startup's ticker symbol will be RIVN. With American electric vehicle manufacturers Tesla (TSLA) (up 34.8%) and Lucid LCID (up 358.7%) soaring this year, all eyes are glued on the Rivian IPO.
Rivian Automotive, backed by Amazon.com Inc., lately boosted the expected offer price of its shares, with the electric vehicle manufacturer aiming a valuation of as much as $65 billion in its initial public offering.
Rivian had earlier aimed for a valuation of more than $53 billion at $62 per share. The company now expects to sell 135 million shares in the range of $72-$74 per share to raise nearly $10 billion on Nov 9. Such optimism came after a successful investor roadshow.
If the target is achieved, the electric vehicle maker would be potentially almost as valuable as rival Honda Motor. Among other U.S. automakers vying for EV market share, General Motors (GM) has a market valuation of $86.42 billion, and Ford (F) $79.8 billion as of Nov 8. Lucid Motors, which hit the market earlier this year via a SPAC merger, has a market cap of around $74 billion.
Also, it would make Rivian the third-largest initial public offering by funds raised in the past decade in the United States. Only three other companies (Alibaba, Meta Platforms and Uber) have raised more than $8 billion while going public since 2011, according to data from Dealogic, as quoted on CNBC.
Since last year, companies in the EV space are appearing red-hot, especially among SPAC investors as they are looking for a Tesla-like investment. Tesla shares recorded their biggest monthly rally in almost a year to cap October. It became a trillion-dollar company in the month.
Is Rivian IPO At All Lucrative?
Analysts have various views on it.Notably,Rivian is manufacturing commercial last-mile delivery vans for Amazon, which has said it plans to have 10,000 vans on the road by 2022 and 100,000 by 2030. Rivian also beat Tesla, GM and Ford to the market with an electric pickup, the R1T, which has been well-accepted by users. The company plans to deliver 1,000 RITs by the end of the year.
But then David Trainer – a writer on Seeking Alpha indicated that about $65 billion valuation that Rivian is currently looking for is well below the $80 billion valuation the company originally wanted, but the current one is also too high.
“Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months,” the analyst noted. Per the skeptical analyst, Rivian has yet to manufacture a considerable number of vehicles and lacks the infrastructure and experience than its big-shot competitors as well as incumbents like General Motors (GM) and BMW. The two auto behemoths have “decades of experience and multi-billion dollar plans to expand EV production” pet the seekingalpha article.
Right Time to Buy Electric Vehicle ETFs?
The ongoing global push for restoration of climate, President inclination for the same, emerging countries’ pledge for being carbon-neutral in the COP-26 Glasgow and the higher demand for alternative energy amid the fossil fuel rally are great for electric vehicle’s future.
Even if Rivian IPO comes out as a pricey bet, the sheer demand for the EV segment would boost the sector ETFs.Most big-shot companies, including Apple (AAPL), are also eyeing the space. A few electric-vehicle ETFs like Global X Autonomous & Electric Vehicles ETF DRIV , SPDR S&P Kensho Smart Mobility ETF HAIL , iShares Self-Driving EV and Tech ETF IDRV and Simplify Volt RoboCar Disruption and Tech ETF VCAR will gain from the EV’s growing acceptance. These ETFs may also add the high-profile stock Rivian after it goes public. Investors can track the event closely and bet on the EV ETFs beforehand.
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Global X Autonomous & Electric Vehicles ETF (DRIV): ETF Research Reports
iShares SelfDriving EV and Tech ETF (IDRV): ETF Research Reports
SPDR S&P Kensho Smart Mobility ETF (HAIL): ETF Research Reports
Simplify Volt Robocar Disruption and Tech ETF (VCAR): ETF Research Reports
Lucid Group, Inc. (LCID): Free Stock Analysis Report
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