Rivian’s mega IPO is a good test of the meme stock craze

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

Don’t get me incorrect. The corporate’s IPO, which is able to internet $12 billion on an $80 billion valuation, is proving to be an immensely engaging stock and is already drawing comparisons to different historic public choices like Fb. However for anybody who will get their funding information from Reddit boards like r/WallStreetBets, the Rivian IPO was extra possible to attract an eye-roll, an off-color comment, or a crude emoji.

“Lmaoooo 80B do they suppose we’re fucking silly?” one user wrote last month in response to the information about Rivian’s upcoming IPO. “Bro they have to suppose since stonks solely go up, this shit will surpass it with no prob. What a loopy 12 months.”

“Lmaoooo 80B do they suppose we’re fucking silly?”

Tesla’s standing as a meme stock has helped propel the Bay Space-based (and shortly to be Austin, Texas-based) firm’s share value into the stratosphere and make its CEO Elon Musk one of the richest folks in the world. The share value 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 automotive company Hertz was sufficient to push Musk’s firm previous the $1 trillion mark.

Which is to not say being a meme stock is a secure house to occupy. An errant tweet from Musk final 12 months about the stock being overvalued despatched the share value 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 variety of the level. In the meantime, Tesla has regained the worth it misplaced after Musk’s tweet, after which some. (Musk is in the midst of promoting off 10 % of his shares in Tesla.)

On November tenth, the day of Rivian’s huge public debut, Tesla’s stock was nonetheless the hottest ticker on Reddit, in keeping with Ape Wisdom, which tracks the in style shares on the message board. Rivian is listed as the seventh hottest stock, 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 darkish arts of the world,” mentioned Reilly Brennan, basic companion at enterprise capital agency Vehicles. “It’s actually onerous to do it persistently over a lengthy interval of time.”

“Being a meme stock, to some extent, is conjuring the darkish arts of the world”

Rivian’s future is unwritten, however the firm doesn’t appear to have the obligatory elements to make a meme stock. Its founder and CEO, RJ Scaringe, is not particularly lively on Twitter, doesn’t courtroom controversy for the sake of controversy, and doesn’t seem to aspire to something aside from main a firm that makes actually nice electrical vans, SUVs, and vans. If he has an edgy sense of humor, we’ve but to see proof of it.

Rivian has far fewer on-line followers than Tesla by advantage of the indisputable fact that its automobiles have but to achieve prospects. (The corporate’s electrical truck, the R1T, is anticipated to start deliveries earlier than the finish of the 12 months.) However the firm seems to be cultivating a buyer base of rich outside varieties — not essentially the sort of one who would venture their very own id onto an EV firm after which reply to any criticism of mentioned firm by losing their shit online.

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

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Picture by Mitchell Clark / The Verge

Rivian’s sluggish and deliberate strategy stands in distinction to different corporations that briefly achieved meme stock standing, solely to look at it slip away. Hydrogen trucking startup Nikola was capable of run up a $30 billion valuation on little greater than a few buzzy movies and a CEO doing his greatest Musk impression. However after going public, and simply as the startup was about to safe an funding from Normal 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 test case for the public market’s urge for food for what Brennan calls a “pure play” EV firm — an automaker that is solely making electrical automobiles. Main automotive corporations like Ford and GM are sometimes left speaking out of each side of their mouth, touting large investments in EV manufacturing and battery manufacturing, whereas additionally persevering with to promote gas-guzzling vans and SUVs that pollute the surroundings. Different pure EV corporations, like Lucid Motors, went public by merging with a blank-check firm, or SPAC, and all the dangers that entails. Rivian doesn’t have that very same variety of baggage.

“The corporate has little or no in the method of meme foreign money,” Brennan, who is not an investor in the firm, mentioned. “They haven’t finished a lot of the issues that the relaxation of the market has finished, whether or not you’re speaking about the model new EV SPAC [special acquisition] corporations or Tesla. So I simply suppose inherently there’s a quiet storm side of Rivian’s progress over the subsequent few years, which is totally fascinating.”

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