Rivian Customers Cash In on Pre-Order Stock Offer

EV buyers were eligible to buy IPO shares that then jumped
By Bob Cronin,  Newser Staff
Posted Nov 11, 2021 5:10 PM CST
Rivian Had a Profitable IPO. So Did Its Pre-Order Customers
The 2022 Rivian R1S. The R1S is an electric midsize SUV and of two new electric vehicles from this startup American electric vehicle manufacturer.   (Rivian Automotive via AP)

When Rivian set up its initial public offering, the electric vehicle company set aside 7% of its IPO allocation for its directed share program. Eligible participants included anyone pre-ordering a vehicle, CNBC reports. So when Rajiv Patel put down $1,000 for an SUV, he maxed out on the stock deal, buying 175 shares for the IPO price of $78 apiece. The company went public on Wednesday, and Rivian and Patel had a good day. The shares closed at a 29% increase, meaning Patel's $13,650 stake was worth $17,628.

Patel is also invested in Tesla and Lucid Motors, and he's placed a refundable deposit on a Lucid vehicle. "But I think I'm fully committed to Rivian at this point," he said. The arrival date for his R1S is unknown, though; the company hopes to have its 55,400 back orders delivered by the end of 2023. Rivian also is busy developing delivery vehicles for Amazon, 10,000 of which are due next year. Despite the fact that the company has no products yet, and it projects third-quarter revenue between nothing and $1 million, Rivian's market cap is now $86 billion. That puts it on par with General Motors. The IPO will net $12 billion, per the Verge.

One expert says it all works for investors like Patel, an environmental consultant who lives in Austin. Retail investors usually are cut out from the typical first-day jump in share price. And because DSP participants aren't bound by a post-IPO lock-up period, they can sell their newly bought shares right away and cash in. "You kind of know going in this is going to be a pretty good sweetheart deal for customers who sign up," said Joshua White, a Vanderbilt University professor. "Not having a product, it's a way to extend some goodwill upfront so they can lock in those returns right away." (More initial public offering stories.)

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