Rivian’s mega IPO is an efficient check of the meme inventory craze

Rivian’s hotly anticipated public debut is lastly right here, however the electrical automobile firm just isn’t producing the identical type of feverish on-line posting as its rival Tesla or different EV startups — and that’s in all probability a great factor.

Don’t get me mistaken. The firm’s IPO, which can internet $12 billion on an $80 billion valuation, is proving to be an immensely enticing inventory and is already drawing comparisons to different historic public choices like Facebook. But for anybody who will get their funding information from Reddit boards like r/WallStreetBets, the Rivian IPO was extra probably to attract an eye-roll, an off-color comment, or a crude emoji.

“Lmaoooo 80B do they think we’re fucking stupid?” one user wrote last month in response to the information about Rivian’s upcoming IPO. “Bro they must think since stonks only go up, this shit will surpass it with no prob. What a crazy year.”

Tesla’s standing as a meme inventory has helped propel the Bay Area-based (and shortly to be Austin, Texas-based) firm’s share worth into the stratosphere and make its CEO Elon Musk one of many richest individuals on the planet. The share worth has been on an upward trajectory since early 2020 and has proven little indicators of flagging. Even mundane headlines like Tesla’s not-a-deal with rental automobile company Hertz was sufficient to push Musk’s firm previous the $1 trillion mark.

Which is to not say being a meme inventory is a secure house to occupy. An errant tweet from Musk final 12 months in regards to the inventory being overvalued despatched the share worth tumbling and worn out $14 billion of Tesla’s market worth. The Federal Reserve thinks meme shares threaten the stability of the financial system, to which retail traders say that’s type of the purpose. Meanwhile, Tesla has regained the worth it misplaced after Musk’s tweet, after which some. (Musk is within the midst of promoting off 10 % of his shares in Tesla.)

On November tenth, the day of Rivian’s huge public debut, Tesla’s inventory was nonetheless the most well-liked ticker on Reddit, based on Ape Wisdom, which tracks the favored shares on the message board. Rivian is listed because the seventh hottest inventory, beating different meme shares like GameStop and AMC however trailing common ones like DoorDash and Palantir. The subsequent day, Rivian had dropped to ninth place.

“Being a meme stock, to some extent, is conjuring the dark arts of the world,” mentioned Reilly Brennan, basic accomplice at enterprise capital agency Trucks. “It’s really hard to do it consistently over a long period of time.”

Rivian’s future is unwritten, however the firm doesn’t appear to have the required components to make a meme inventory. Its founder and CEO, RJ Scaringe, just isn’t particularly energetic on Twitter, doesn’t court docket controversy for the sake of controversy, and doesn’t seem to aspire to something apart from main an organization that makes actually nice electrical vehicles, SUVs, and vans. If he has an edgy humorousness, we’ve but to see proof of it.

Rivian has far fewer on-line followers than Tesla by advantage of the truth that its automobiles have but to succeed in clients. (The firm’s electrical truck, the R1T, is anticipated to start deliveries earlier than the tip of the 12 months.) But the corporate seems to be cultivating a buyer base of rich outdoor varieties — not essentially the kind of one who would undertaking their very own identification onto an EV firm after which reply to any criticism of mentioned firm by losing their shit online.

If meme shares, in essence, signify a center finger to institutional traders and short-sellers, then Rivian was already going to have a tricky row to hoe. The firm has but to seek out itself within the crosshairs of any main short-seller. And Rivian has a number of brand-name backers, reminiscent of Amazon (which owns 20 % of the corporate) and Ford (which helped manufacture the entire firm’s preproduction automobiles). Investing in Rivian would hardly display any revolt towards the system.

Rivian’s sluggish and deliberate method stands in distinction to different firms that briefly achieved meme inventory standing, solely to look at it slip away. Hydrogen trucking startup Nikola was in a position to run up a $30 billion valuation on little quite a lot of buzzy movies and a CEO doing his finest Musk impression. But after going public, and simply because the startup was about to safe an funding from General Motors, Nikola’s then CEO Trevor Milton was accused of mendacity to traders. Milton ultimately stepped down and, this 12 months, was arrested and indicted on a number of counts of fraud.

Rivian’s lack of meme-worthy moments makes it an fascinating check case for the general public market’s urge for food for what Brennan calls a “pure play” EV firm — an automaker that’s solely making electrical automobiles. Major automobile firms like Ford and GM are sometimes left speaking out of either side of their mouth, touting large investments in EV manufacturing and battery manufacturing, whereas additionally persevering with to promote gas-guzzling vehicles and SUVs that pollute the setting. Other pure EV firms, like Lucid Motors, went public by merging with a blank-check firm, or SPAC, and all of the dangers that entails. Rivian doesn’t have that very same type of baggage.

“The company has very little in the way of meme currency,” Brennan, who just isn’t an investor within the firm, mentioned. “They haven’t done a lot of the things that the rest of the market has done, whether you’re talking about the brand new EV SPAC [special acquisition] companies or Tesla. So I just think inherently there’s a quiet storm aspect of Rivian’s growth over the next few years, which is utterly fascinating.”