After the first two days of trading in 2010, the market value of electric car manufacturer Tesla just exceeded $2 billion.
RJ Scaringe, CEO of electric car manufacturer Rivian, was worth so much money after his company went public on the second day.
Rivian’s share price soared 57% in the first two days of its NASDAQ listing, bringing the company’s market value to nearly 105 billion U.S. dollars. Scaringe founded Rivian in 2009. Based on Thursday’s closing price of $122.99, he owns 17.6 million shares, valued at $2.2 billion.
The 38-year-old Scaringe attracted investors to his vision of establishing an electric car company that will sell products to consumers who want to use electric cars and companies that are trying to drastically reduce their dependence on fossil fuels. In a letter to shareholders in the IPO prospectus, Scaringe stated that in 2012 he was no longer committed to building an “efficient sports car”, but began to focus on how to “maximize impact.”
Scaringe wrote: “We started thinking about the truck, SUV, and crossover market segments because they provide us with a huge opportunity to show how clean, technology-centric vehicles can eliminate long-term accepted compromises.” “We hope. Build our brand by providing a combination of efficiency, on-road performance, off-road capability, functional utility, and product improvements that are simply not available on the market.”
The company said that its R1S SUV and R1T pickup trucks have booked 55,400 units, and it has signed a contract with Amazon to manufacture 100,000 electric trucks by 2030. However, believing that Rivian assembles vehicles and delivers them in a profitable manner is a huge gamble for investors who are already interested. The company’s valuation is higher than traditional auto giants Ford and General Motors. The company has never recorded revenue and expects sales in the third quarter to be less than $1 million.
But business fundamentals have not driven the current rise in electric vehicle stocks.
Since Tesla’s relatively tepid IPO in 2010, the electric vehicle market has become a safe haven for speculators, and Tesla has become a catalyst. On the basis of the split adjustment, Tesla went public at a price of $3.40 per share. It closed at $1,063.51 on Thursday, making it one of only five U.S. companies worth more than $1 trillion.
Maja Hitij | Getty Images News | Getty Images
Other companies in this field have soared recently. China’s Weilai is valued at US$69 billion, and California’s Lucid Motors is valued at approximately US$73 billion four months after listing.
Weilai reported revenue of approximately US$1.5 billion in the third quarter and an operating loss of more than US$150 million.
Lucid just confirmed last month that the first customer deliveries of its $169,000 Air Dream Edition sedan will begin. When introducing investors, the company expected annual revenue of 97 million U.S. dollars.
Scaringe has control
Tesla is the only high-growth company in the group that has turned profitable, but it is still a car company that trades like a software manufacturer. Most of the hype is related to the noisy CEO Elon Musk, who is the richest man on the planet and has a net worth of nearly $300 billion, mainly related to his Tesla shares.
Scaringe, who has a PhD in mechanical engineering from the Massachusetts Institute of Technology, is a far cry from Musk’s financial logo. But he created a similar ownership structure that gave him tremendous power.
Rivian is headquartered in Irvine, California, and owns two types of stocks. Scaringe only owns 1% of Class A stocks, or those stocks that are held and available for trading by a wider investor base. But he owns 100% of Class B shares, and each share of voting control is 10 times that of Class A shares.
Together, Skalynch, who also serves as the chairman of the board, has 9.5% of the voting control. His veto power is greater. This is because in order to make any major changes at the board level or in the company’s articles of association, at least 80% of the holders of Class B shares must agree to this move.
In addition to holding a large amount of equity, if the company performs well, Scarlinger has the opportunity to substantially increase his wealth. In January, the board of directors approved 6.8 million time-based equity awards and 20.4 million share awards, which were awarded in 12 installments based on the location of the stock transaction.
The company admitted in its prospectus that a bet on Rivian is a bet on Scaringe.
“We are highly dependent on the service and reputation of our founder and CEO Robert J. Scaringe,” the company said in the risk factors section of the document. “Dr. Scaringe has a significant influence and driving force on our business plan. If Dr. Scaringe ceases services due to death, disability or any other reason, or his reputation is adversely affected by personal actions or negligence or other incidents regardless of his control We will be at a disadvantage if we are within or outside the scope.”
Scaringe didn’t just generate windfalls from his company’s IPO. Rivian’s corporate supporters are sitting on larger funds.
As of Thursday’s close, Amazon has invested more than $1.3 billion in Rivian and holds $19.7 billion worth of shares. The company said in September that its total equity investment, including Rivian, was $3.8 billion.
T. Rowe Price and his fund own Rivian shares worth more than $16 billion. Global Oryx, a subsidiary of Abdul Latif Jameel Companies in Saudi Arabia, controls approximately US$14 billion worth of shares, while Ford owns US$12.6 billion worth of shares.
watch: Who is the billionaire founder of Rivian?
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