What’s next delay?

[Ladiver]

Now that the IPO is done, what will be our next delay?

My guess, being flush with cash, they will focus on plant expansion and investing in battery manufacturing.

Building R1 vehicles is going to take a backseat to "growth".

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[LoneStar]

Going public company means public scrutiny and chasing "Shareholder value" which ultimately prioritizes revenue/profit. So getting vehicles out (consumer & commercial) to pump-up the revenue stream will be very high on the corporate priorities.

Not saying there won't be more delays unfortunately....

 

[Ladiver]

Going public company means public scrutiny and chasing "Shareholder value" which ultimately prioritizes revenue/profit. So getting vehicles out (consumer & commercial) to pump-up the revenue stream will be very high on the corporate priorities.

Not saying there won't be more delays unfortunately....

Yes, that is how traditional business works. RJ and Rivian are not traditional. I believe that RJ will not allow tradition to tell him what to do.

Just because they are public, he still holds controlling interest and will do whatever he wants?

 

[Aroohoo]

Yes, that is how traditional business works. RJ and Rivian are not traditional. I believe that RJ will not allow tradition to tell him what to do.

Just because they are public, he still holds controlling interest and will do whatever he wants?

US corporations have a Fiduciary obligation to return (some even say maximize) value to shareholders. Some recent companies have Incorporation Charters that look beyond shareholder value (e.g. consider stakeholders, environment, etc); I haven't tried to locate the Rivan charter. Given what we know of the public facing portion of Rivian, I would be suprised if it didn't have a more encompassing charter.

Even if RJ does still have a controlling interest, if the company charter doesn't allow him waiver from maximizing shareholder value, he has a Fiduciary responsibility to maximize shareholder value, which usually means maximizing revenue/profit. One can debate whether that should be measured quarterly, yearly, or by the decade...

 

[Trekkie]

Man this forum attracts some of the most negative posters I've ever seen in a car forum.

 

[Ladiver]

I am very much a half full kinda guy.

Plan for the worst, hope for the best.

It is easy to be a pessimist with Rivian. They have everything stacked against them and their transparency pre S-1 has been clear as mud.

I have never met RJ, but those who have, said he is a great guy. When that same great guy is listed in the S-1 as a very high threat if something were to happen, then Rivian (a company valued more than Honda) is incapable of running itself.

 

[Speedrye]

If stock values keep going up, the next delay will be once employees can sell their shares and retire upon some crazy valuation.

 

[TessP100D]

Man this forum attracts some of the most negative posters I've ever seen in a car forum.

Dam Klingones.

 

[Forager]

If stock values keep going up, the next delay will be once employees can sell their shares and retire upon some crazy valuation.

Might be true for some early employees, but anyone that joined 2020 or later will have a 4 year vesting so there won’t be a mad dash to the door. Also, most tech companies don’t renew stock options for employees after 4 years, so this level of attrition is not only expected, it is encouraged. “Old” employees leaving, even with only 4 years of tenure, opens positions for newer, wide-eyed employees.

This is how Rivian has been able to attract so many ex-Tesla to their door. Sure, some of it is due to company ethos, but a lot of it is because long-term compensation for employees doesn’t exist in the tech world except for a select few, perhaps the “top” 10%.

 

[paariv]

I have never met RJ, but those who have, said he is a great guy. When that same great guy is listed in the S-1 as a very high threat if something were to happen, then Rivian (a company valued more than Honda) is incapable of running itself.

These disclosures are pretty boilerplate. RJ is doubtless important, but I wouldn't read anything in to the choice to include that.

 

[Ralph]

US corporations have a Fiduciary obligation to return (some even say maximize) value to shareholders. Some recent companies have Incorporation Charters that look beyond shareholder value (e.g. consider stakeholders, environment, etc); I haven't tried to locate the Rivan charter. Given what we know of the public facing portion of Rivian, I would be suprised if it didn't have a more encompassing charter.

Even if RJ does still have a controlling interest, if the company charter doesn't allow him waiver from maximizing shareholder value, he has a Fiduciary responsibility to maximize shareholder value, which usually means maximizing revenue/profit. One can debate whether that should be measured quarterly, yearly, or by the decade...

But Bezos/Amazon (and others) have proven that you don't have to focus returns on the short term. Rivian will almost certainly follow Bezos example due to their relationship. An exciting prospect to me, as an extreme focus on the short term leads to bad analysis and poor performance. True for most things in the world.

As a result Rivian will likely not be 'profitable' for years as they fund growth. Profit is not the same as value, but the majority of the investment community ragged on Amazon *hard* for the first decade or so.

 

[paariv]

US corporations have a Fiduciary obligation to return (some even say maximize) value to shareholders. Some recent companies have Incorporation Charters that look beyond shareholder value (e.g. consider stakeholders, environment, etc); I haven't tried to locate the Rivan charter. Given what we know of the public facing portion of Rivian, I would be suprised if it didn't have a more encompassing charter.

Even if RJ does still have a controlling interest, if the company charter doesn't allow him waiver from maximizing shareholder value, he has a Fiduciary responsibility to maximize shareholder value, which usually means maximizing revenue/profit. One can debate whether that should be measured quarterly, yearly, or by the decade...

People say this like the analysis ends there and companies are required to be as rapacious as possible. In reality, corporate strategies are evaluated under incredibly lenient standards - the business judgment rule - which means that so long as your decisions aren't transparently corrupt and self-dealing, management/BOD get a pass even if things work out poorly.

RJ et al can say that they think the company will be best served by thinking long term, pricing vehicles low for market share, getting a good reputation as a corporate citizen by donating to their communities, treating employees generously, etc, and they will be fine even if that's not what a PE fund would do when running the company.

So long as they're not lining their own pockets with these specific decisions, there's not going to be a viable shareholder suit based on a corporate strategy that leaves short term $$ on the table in service of those goals.

 

[Aroohoo]

People say this like the analysis ends there and companies are required to be as rapacious as possible. In reality, corporate strategies are evaluated under incredibly lenient standards - the business judgment rule - which means that so long as your decisions aren't transparently corrupt and self-dealing, management/BOD get a pass even if things work out poorly.

RJ et al can say that they think the company will be best served by thinking long term, priving vehicles low for market share, getting a good reputation as a corporate citizen by donating to their communities, treating employees generously, etc, and they will be fine even if that's not what a PE fund would do when running the company.

So long as they're not lining their own pockets with these specific decisions, there's not going to be a viable shareholder suit based on a corporate strategy that leaves short term $$ on the table in service of those goals.

I am in full agreement. My original point being that historically maximizing shareholder value has been about maximizing P/E on a quarterly basis.

It takes true leadership/courage to not be sucked into the quarterly or yearly profit comparisons and stuck to a vision that you believe will return more over the long run.

 

[RivianXpress]

I’m glad I’m not doing a first drive today- the Rivian staff is going to be glued to their phones!

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