Elon Musk taunts Rivian after blockbuster IPO, says 'true test' is high production, breakeven cash flow
• Rivian is the second most valuable carmaker in the U.S. behind Tesla, surpassing Ford and General Motors by market cap
• The EV maker has no established business model yet, expects to generate revenue of up to $1 million and foresees to lose up to $1.28 billion for the third quarter
Tesla Inc CEO Elon Musk taunted the rival electric pickup startup Rivian Automotive Inc, which had a blockbuster IPO this week and currently boasts a market cap of more than $125 billion, saying that high production and break-even cash flow will be the actual test.
“There have been hundreds of automotive startups, both electric and combustion, but Tesla is [the] only American carmaker to reach high volume production & positive cash flow in past 100 years,” Musk tweeted.
Blockbuster IPO
Rivian raised around $12 billion on the first day of its market debut, making the initial public offering the largest in the world this year. The IPO also made Rivian, which has no established business model yet, the second most valuable car manufacturer in the U.S. behind Tesla, surpassing Ford and General Motors by market cap.
Shares of Rivian jumped 57% in the first two days on the Nasdaq.
The CEO of the electric pickup truck maker, R.J. Scaringe, who founded Rivian in 2009, owns 17.6 million shares, valued at $2.2 billion, based on Thursday’s closing price, while after its first two days of trading in 2010, Tesla had a market cap of just more than $2 billion.
On Friday, Rivian surged nearly 10% to $135.20.
Concerns around profitability
The EV maker, in its IPO prospect, said while it expects to generate revenue of up to $1 million for the third quarter, it foresees to lose up to $1.28 billion during the same quarter.
The company also said it has 55,400 preorders for its R1S SUV and R1T pickup truck and has a contract to build 100,000 electric vans for Amazon by 2030.
“I hope they’re [Rivian] able to achieve high production and break-even cash flow. That is the true test,” Musk said.
The market is speculating investors who have valued the company higher than traditional auto giants is gambling by trusting Rivian to assemble the vehicles and deliver them profitably.
“We began thinking about the truck, SUV, and crossover segments as they presented a massive opportunity for us to demonstrate how a clean sheet, technology-focused vehicle could eliminate long-accepted compromises,” Scaringe wrote in the company’s IPO prospectus.
“We wanted to establish our brand by delivering a combination of efficiency, on-road performance, off-road capability, functional utility, and product refinement that simply didn’t exist in the market.”
It’s not the first time Tesla CEO has taunted Rivian. Last month he tweeted, “prototypes are trivial compared to scaling production and supply chain.”
Picture Credit: NY Post
