- With Rivian’s 57% two-day rally, CEO RJ Scaring holds a $2.2 billion stake.
- Scaring founded Rivian in 2009, a year before Tesla’s IPO.
- The electric vehicle company has yet to start generating real revenue.
After its first two days of trading in 2010, electric vehicle maker Tesla had a market cap of just over $2 billion.
RJ Scaringe, CEO of EV maker Rivian, is worth so much in his own right after his company’s second day in the public market.
Rivian shares jumped 57% in its first two days on the Nasdaq, giving the company a market cap of about $105 billion. Scaring, who founded Rivian in 2009, owns 17.6 million shares, valued at $2.2 billion, based on Thursday’s closing stock price of $122.99.
Scaring, 38, attracted investors for his vision for an EV company that would sell to consumers who want to go electric, and companies that are trying to significantly reduce their reliance on fossil fuels. in his letter to the shareholders IPO prospectusIn 2012, Scaring said he moved away from attempting to build an “efficient sports car” and began focusing on “maximizing impact”.
“We began to think about the truck, SUV and crossover segments because they presented a great opportunity for us to demonstrate how a clean sheet, technology-focused vehicle can eliminate long-accepted agreements,” said Scaring. wrote. “We wanted to establish our brand by providing a combination of efficiency, on-road performance, off-road capability, functional utility, and product refinement that did not exist in the market place.”
The company says it has 55,400 pre-orders for the R1S SUV and R1T pickup truck and has a contract with Amazon to build 100,000 electric vans by 2030. However, relying on Rivian to assemble the vehicles and distribute them profitably represents a bigger gamble for investors who already value the company more than traditional auto giants Ford and General Motors. give. The company has never recorded revenue and expects less than $1 million in sales in Q3.
But business fundamentals aren’t driving the current run-up in EV stocks.
Since Tesla’s relatively Weak IPO in 2010The EV market has turned into a haven for speculators, with Tesla acting as the catalyst. On a split-adjusted basis, Tesla went public at $3.40 per share. It closed Thursday at $1,063.51 and is one of only five US companies to be worth more than $1 trillion.
Others in the space have skyrocketed of late, with China’s Nio valued at $69 billion and California’s Lucid Motors at about $73 billion just four months after it hit the public market.
Nio reported revenue of approximately $1.5 billion in the third quarter and an operating loss of more than $150 million.
Lucid confirmed just last month that the first customer deliveries of its $169,000 Air Dream Edition sedan were about to begin. in his presentation to investors, the company forecast full year revenue of $97 million.
Tesla is the only one in the group that has turned into a profitable high-growth business, but it’s still a car company that does business like a software maker. Much of the hype has been linked to enthusiastic CEO Elon Musk, the richest man on the planet with a net worth of close to $300 billion, mostly tied to his Tesla holdings.
Scaringe, who holds a PhD in mechanical engineering from the Massachusetts Institute of Technology, is far from Musk’s financial trail. But they have created a similar ownership structure that gives them external rights.
Rivian, which is based in Irvine, Calif., has two classes of stock. Scaringe holds only 1% of Class A shares, or those with a wider investor base and are available for trading. But they own 100% of Class B shares, and each one has 10 times the amount of voting control as Class A shares.
Add all this up, and Scaringe, who is also chairman of the board, has 9.5% of the voting control. Their veto power is even greater. This is because in order to make any major changes at the board level or in the company’s bylaws, holders of at least 80% of Class B shares would have to go through with this move.
In addition to its huge equity holdings, scarring has an opportunity to increase its wealth dramatically if the company does well. In January, the Board approved an equity award of 6.8 million shares which is time based and an award of 20.4 million shares, vested in 12 installments based on the stock being traded.
The company acknowledges in its prospectus that a bet on Rivian is a bet on scarring.
“We rely heavily on the services and reputation of our founder and CEO Robert J. Scaring,” the company says in the risk factors section of the filing. “Dr. Scaringe has a significant impact on our business plan and is a driver. If Dr. Scaringe discontinues his service due to death, disability or any other cause, or if his reputation is adversely affected by personal actions or omissions or other events, Within his control or outside, we will suffer great loss.”
Scaringe is not only making windfall gains from his company’s IPO. Rivian’s corporate supporters are sitting on even bigger bucks.
Amazon, which invested more than $1.3 billion in Rivian, has a stake of $19.7 billion as of the end of Thursday. company said in september That its equity investments, including Rivian, totaled $3.8 billion.
T. Rowe Price and his funds hold more than $16 billion worth of shares in Rivian. Global Oryx, a unit of Saudi Arabia’s Abdul Latif Jameel Companies, controls approximately $14 billion in shares, while Ford owns $12.6 billion.
Watch: Who is the billionaire founder of Rivian?