The float of nascent US electric vehicle (EV) maker Rivian automotive exploded on Wall Street on Wednesday as the shares surged by more than 53% at one stage from their issue price of $US78.
The stock opened at $US106.75 per share, surging past the offer price of $78, and rose as high as $US119.46.
The blowout success of the float came on a day when Wall Street fell after the October Consumer Price inflation report showed core cost pressures at their highest in more than 30 years.
The Dow shed 240.04 points, or about 0.7%, to close at 36,079.94. The S&P 500 fell 0.8% to 4,646.71 and Nasdaq dropped nearly 1.7% to 15,622.71.
But led by Rivian, Tesla and GM shares rose but those of shareholders, Amazon and Ford fell.
At its peak Rivian was valued at more than $US100 billion, making it the biggest IPO of the year so far in any market.
That made Rivian the second most valuable US automaker at one point behind Tesla Inc, which is worth $US1.01 trillion. Tesla shares rose more than 4%, ending the two day sell off after chair Elon Musk stupidly asked Twitter users should he sell 10% of his holding in the company.
They of course said yes and the shares tanked, falling 12% on Tuesday as fears grew that musk would follow other insiders who sold some of their shares last week.
Rivian’s successful issue though changed thinking about Musk’s company and Tesla added more than $US40 billion in value.
Rivian has not started selling vehicles, has little revenue to report but has big orders from shareholder Amazon.
And yet with a market cap of just over $US86 billion it is now ranked ahead of General Motors Co at $US85 billion; Ford Motor Co at about $US77 billion, and Lucid Group at $US65 billion whose shares fell 9% as Rivian was seen taking shareholder interest.
The float allows Rivian to raise $US11.9 billion to fund growth, and that figure could rise to $US13.7 billion if the full over-allotment of shares is exercised.
Amazon is Rivian’s largest shareholder with a 20% stake while Ford has just under 14%.
Rivian has been spending heavily to ramp up production, especially its luxury all-electric R1T pickup truck, which was launched in September. It plans to follow that with an SUV and delivery van, hitting some of the hottest segments in the market, as well as meeting Amazon’s order for 150,000 trucks by the end of 2023,
The company plans to build at least one million vehicles a year by the end of the decade. It has a plant in Illinois, and has announced plans to open a second US factory and eventually setting up production in China and Europe (following Tesla’s lead).