Back to top

Image: Bigstock

Rivian IPO Prospect Opens Opportunities for These ETFs

Read MoreHide Full Article

Rivian Automotive Inc., the electric-vehicle start-up backed by Amazon.com Inc. (AMZN - Free Report) and Ford Motor Co. (F - Free Report) , is eyeing to go public this fall at a valuation of about $50 billion, per a Bloomberg article, as quoted on Yahoo Finance. At a $50 billion valuation, it would likely be one of the biggest IPOs of 2021 and one of the most successful EV listings since Tesla’s 2010 offering.

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 to be delivered by 2024. Rivian has plans to replicate and launch those products with smaller models at China and Europe.

Most recently, General Motors also announced its entry into the electric delivery vehicle business. GM's first BrightDrop commercial vans are expected to be delivered to FedEx later this year. The company’s deliveries of R1T pickups would begin in June, while R1S SUVs would see the start of deliveries in August (read: Guide to Electric Vehicle ETFs).

EV IPOs Coming in Bulk

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. Another Chinese electric-car company, XPeng Inc., raised $1.5 billion in August in a U.S. listing. Last year, Nikola Corp. also went public in a deal with a blank-check company, the Bloomberg article noted.

Fisker, Canoo and Lordstown Motors are yet to deliver any vehicle, but have market caps around $4 billion following blank-check mergers last year, per the PitchBook data (read: Blank Check ETF Hits Market, Worth Investing in Q4).

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.

ETFs to Gain

With automation and technological breakthrough emerging rapidly, 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.

Renaissance IPO ETF (IPO - Free Report) is likely to add the company once it is 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 & operational screens are included in 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 - Free Report) , SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report) , iShares Self-Driving EV and Tech ETF (IDRV - Free Report) and Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report) may also add this high-profile stock after it goes public. Investors can track the event closely and bet on the EV ETFs beforehand.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>