October 17, 2021

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ETFs to Tap on Rivian’s High-Profile IPO Move

Rivian Automotive Inc., the electric-vehicle start-up backed by Amazon.com Inc. (AMZN) and Ford Motor Co. (F), has  reportedly filed for an initial public offering and is seeking a roughly $80 billion valuation, according to people familiar with the matter, as quoted on Bloomberg.

At an $80-billion valuation, Rivian would likely mark one of the biggest IPOs of 2021 and one of the most successful EV listings since Tesla’s 2010 offering. General Motors (GM), another e-truck hopeful, is a $72 billion enterprise at the moment, per Bloomberg.

The startup was valued at $27.6 billion in a funding round in January, Bloomberg News reported, as quoted on Yahoo Finance. Rivian raised $2.65 billion in the round from a group of investors led by T. Rowe Price Group Inc. (TROW).

Overall, it raised more than $8 billion since the start of 2019 from investors who expect its battery-electric pickup and SUV to gain market share in the United States. Needless to say, Rivian is likely to be one of the highest-profile (with big names in its board) competitors to Tesla Inc. (TSLA).

Rivian also has its foot on the field where Tesla does not as yet. Amazon’s new electric delivery vans will be built by Rivian. The delivery giant looks to have 10,000 vehicles on the road by 2022. The first Amazon vehicles will go into production at Rivian’s factory in Illinois in late 2021, with all vehicles expected to be delivered by 2024. Rivian has plans to replicate and launch those products with smaller models at China and Europe.

Several electric vehicle makers and related companies went public past year through IPOs or deals with so-called blank-check companies. Chinese EV startup Li Auto Inc. raised $1.26 billion in a U.S. IPO in July 2020. Another Chinese electric-car company, XPeng Inc., raised $1.5 billion in August 2020 in a U.S. listing. Last year, Nikola Corp. also went public in a deal with a blank-check company, the Bloomberg article noted.

In the second half of 2020, an index of SPACs that merged with mobility tech companies, jumped 77.7%, outperforming the S&P 500, Nasdaq 100 and the Renaissance IPO Index, according to a recent PitchBook.

With automation and technological breakthrough emerging rapidly, a fast pickup in electric vehicles is in the cards. Tesla’s success is known to all by now. Most big-shot companies, including Apple AAPL, are also eyeing the space.

ETFs to Gain

Renaissance IPO ETF (IPO) is likely to add the company once it goes public. IPO is a portfolio of newly U.S.-listed initial public offerings of companies whose unseasoned equities are under-represented in the core U.S. equity indices. IPOs that meet liquidity and operational screens are included on the index at the end of the fifth day of trading, or upon quarterly reviews, weighted by tradable float, capped at 10% and removed after two years.

Moreover, a few electric-vehicle ETFs like Global X Autonomous & Electric Vehicles ETF DRIV, SPDR S&P Kensho Smart Mobility ETF HAIL, iShares Self-Driving EV and Tech ETF IDRV and Simplify Volt RoboCar Disruption and Tech ETF VCAR may also add this high-profile stock after it goes public. Investors can track the event closely and bet on the EV ETFs beforehand.

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