Rivian pre-orders revamped $ 240 million in revenue on IPO-Pop

Rivian electric trucks are parked near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.

Michael M. Santiago | Getty Images

Rajiv Patel, an environmental consultant based in Austin, Texas, posted a $ 1,000 bail on a Rivian electric SUV earlier this year. He has no idea when he’ll get his vehicle called R1S, but his deposit pays off in a completely different way.

As a pre-order customer, Patel was able to buy into Rivian’s IPO on Tuesday evening as part of the company’s targeted share program. He bought the 175 maximum shares for $ 13,650 at an IPO price of $ 78. After rising 29% on Wednesday, Patel’s stake is now worth $ 17,628.

“When I invest in these companies, I’m always the long-hold type,” said Patel, 45, adding that he invested in Tesla shortly after the 2010 IPO and also bought shares in Lucid Motors that were in the July went public. “I’m definitely not the meme stick type. With these three, I feel good about technology.”

Technology is all Patel can bet on right now. Following its Nasdaq debut on Wednesday, Rivian has a market cap of $ 86 billion, which is higher than Ford’s and roughly equal to General Motors’, despite the company’s third-quarter sales between $ 0 and $ 1 million forecast.

Rivian reserved up to 7% of the IPO shares for DSP participants, as the company stated in its prospectus. Eligible investors fell into two categories: individuals who had reserved either an R1S or R1T electric truck as of September 30, and company executives, directors and their affiliates. The deposits will be refunded.

The program follows similar steps taken by Airbnb, Uber, and Doximity, which are providing portions of their offerings for hosts, drivers, and doctors. What sets Rivians DSP apart is that despite an order backlog of 55,400 pre-orders as of October 31, the EV company still has no actual customers.

Assuming the DSP has allotted all of its available shares, the participants collectively invested approximately $ 835 million in Rivian’s shares. As of Wednesday’s close of trading, these stocks were valued at nearly $ 1.08 billion, equivalent to roughly $ 245 million on paper earnings.

Joshua White, a finance professor at Vanderbilt University, said it was a big deal for those who can attend, as hot IPO stocks almost always enjoy a first day and retail investors are usually excluded. DSP investors can also sell immediately if they wish, as they are not subject to a blocking period after the IPO.

“They know it’ll be a pretty good bargain deal for customers who sign up,” said White, who previously served as an economist for the Securities and Exchange Commission. “Not having a product is one way to expand the goodwill upfront so they can complete these returns right away.”

Patel received his first email via Rivian’s DSP last month, telling him that he had to pre-register by October 25th. The program was led by Morgan Stanley, the lead underwriter of the IPO.

After the stock traded at $ 78 late Tuesday, Patel could go to his Morgan Stanley account and choose how many shares he wanted, up to 175. He picked the maximum and transferred the money.

Read more about electric vehicles from CNBC Pro

Patel said that while the Rivian R1S is a huge Tesla fan, it will be his first electric vehicle, though he’s not sure when it will arrive. Rivian said it plans to deliver its failed vehicles by the end of 2023. In the meantime, the company is developing delivery vehicles for Amazon, which has ordered 100,000 by 2030, 10,000 of them as soon as next year.

Patel, who has two children, is ready to wait for the Rivian SUV.

“When you have a family with two young children, an SUV is a lot more functional than the Y or X,” said Patel, referring to Tesla’s vehicles. He’s also left a refundable security deposit on a Lucid vehicle, “but I think I’m fully committed to Rivian at this point,” said Patel.

His investments are primarily focused on clean tech companies. However, he admitted that he sold some Tesla stock last year and missed the 2021 rally.

“I had to buy a house,” said Patel. “But the Austin housing market is great, so don’t regret it.”

Correction: An earlier version of this story had an incorrect number for the number of seats in Tesla’s vehicles. The number has been removed.

SEE: Rivian made his debut on the Nadaq today

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