CNBC’s Jim Cramer said Monday that while electric vehicle startup Rivian Automotive has some strong supporters as it prepares to enter the market, he’s skeptical that it will be the next Tesla and would rather own shares in Ford Motor.
“Even if everything is going well for Rivian, this industry gets a little overcrowded here. When Tesla started, there was no one else, ”Cramer said on“ Mad Money ”. Now, however, “Rivian has Ford’s F-150 Lightning hot on his heels, along with GM’s electric Hummer and even Tesla’s Cybertruck.”
With Amazon and Ford as big investors, Rivian has valued its shares between $ 72 and $ 74 for its initial public offering and is expected to begin trading on Wednesday. “Given the company’s plans to offer 135 million shares, we’re talking about a $ 9.85 billion fundraising process, making this the sixth or seventh largest public offering in US history,” said Cramer.
Cramer said he wouldn’t be surprised if Rivian stock stood out even at this high valuation because “the people who buy this thing don’t care about valuation.” Rather, investors are betting that the fledgling company can increase production and become a major competitor in the growing EV market.
Cramer praised Rivian for the number of orders it received not only for its pickup truck and proposed SUV, but also for its large commercial van deal with Amazon. Additionally, the fact that a competitor like Ford is an investor in Rivian is “a great recognition” of Rivian’s potential, he said.
Ultimately, Cramer told the audience that “if you really believe in Rivian, you have my blessings to speculate.” However, he added, “I would prefer to stay on the sidelines and promote my Ford electric vehicle, which is why we own it for the nonprofit foundation.”
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Disclosure: Cramer’s nonprofit trust owns shares in Ford and Amazon.