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Rivian’s initial public offering on Wednesday infused its ledger with nearly $12 billion, boosting the electric truck startup’s cash cushion to roughly $16 billion.
After rising 29 percent in its first day of trading on the Nasdaq exchange, its shares closed at $100.73, giving it a market cap $88.2 billion. By comparison, General Motors’ was $85.1 billion, Toyota Motor Corp.’s was $289.36 billion and Tesla Inc.’s was $1.07 trillion
So, now founder and CEO RJ Scaringe, can quit worrying about money, right?
Despite the windfall from Wall Street, Rivian is long, long way from easy street.
Half of that $16 billion has already been allocated. And profits from vehicle sales will not come quick, the company says. In the first half of this year alone, Rivian recorded a net loss of nearly $1 billion.
The cash demands on the company in the next three years as it ramps up production, invests in new models, opens service centers, adds headcount, expands overseas, builds a new factory, etc., could very well see Rivian, like Tesla, make return trips to the capital markets to recharge its finances.
“We anticipate our cumulative spending on capital expenditures to be approximately $8 billion through the end of 2023 to support our continued commercialization and growth objectives as we strategically invest in infrastructure, including additional manufacturing capacity, battery cell production, service operations, charging networks, experience spaces, and software development,” Rivian told investors.
While Rivian has started delivering the first R1T pickups to retail customers and has pivoted to being a revenue-generating company, expenditures in the coming years will likely far surpass revenue.
In fact, according to Rivian’s stock prospectus, the first vehicles are being sold at a loss, something Laura Schwab, recently departed vice president of sales and marketing, raised concerns about.
And even if Rivian sells at full price every R1T, R1S SUV and electric delivery van it can build, the company still won’t make money.
According to Rivian: “We expect to operate at a negative gross profit per vehicle for the near term as our fixed costs from investments in vehicle technology, manufacturing capacity and charging infrastructure are spread across a smaller product base until we launch additional vehicles and ramp production. This dynamic will cause our gross profit losses to increase on a dollar basis even as our revenue increases from ramping production volumes over the short to medium term.”
Here, according to Rivian, are some of the biggest expenditures it’s facing through 2025:
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