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Amazon Has Bought More Shares In Newly-IPO’d Rivian

Amazon increases its Rivan stake with the latest filings revealing it has bought a further $200 million worth of shares in the company

It was already known that Amazon (NASDAQ: AMZN) had a circa 20% stake in the EV manufacturer, but it has upped the ante again, purchasing an additional 2.5 million shares in Rivan (NASDAQ: RIVN), worth $200 million, bringing its total stake to 22%. The Amazon purchase was made at the IPO price of $78 per share, which has already seen a considerable return.

Rivian’s IPO

Rivian made its Wall Street debut late last Wednesday, on November 10, 2021, valuing the company at over $78 billion — making it the biggest IPO of 2021 and the sixth largest of all time. In a blockbuster IPO, its stock price skyrocketed to over $100 per share as trading began, and the run continued to finish at $129 per share by market close on Friday evening, or a market cap equivalent to over $125 billion.

What does Rivian do?

Rivian is an EV pickup and delivery van manufacturer that was founded by the current acting CEO Robert Scaringe in 2009. Rivian has two flagship products, the R1T (in production) and the R1S, designed for the adventure-seeking consumer, but also offers a suite of products from insurance, credit, and software services. 

Amazon’s investment

Amazon is one of the largest investors in Rivian and it is also relying on the company’s success. It has already made an order for a fleet of 100,000 electric delivery trucks from Rivian which are scheduled for delivery by 2030. Perhaps Amazon is positioning itself for the adoption of electric delivery vans on a grander scale, and it wants to make sure it’s getting a piece of the market before it grows exponentially. But mostly, it will help Amazon develop a sustainable fleet with data insight advantages. 

Is now the time to buy?

Rivian’s valuation is based completely on expectations of future growth. Amazon’s stamp of approval might spark investor interest, but the company still has a long way to go, specifically in regard to scaling production, factory construction, building out a strong infrastructure network for charging, and we need to see if its business model of interconnected services is viable long-term. 

Rivian had over 48,000 pre-orders as of September 2021, but this is nothing compared to the orders direct competitors have received. The Tesla (NASDAQ: TSLA) Cybertruck has at least 250,000 pre-orders, and the Ford (NYSE: F) F150 Lightning had 44,000 reservations in less than 48 hours, both of which are in production with deliveries expected in 2022. Rivian has got a head-start but with only twelve cars produced in Q3, it will need to accelerate that number fast. 

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