Official: Rivian IPO priced at $78 per share (@ $77 billion valuation)!

[LaunchGreen]

I just showed my work, feel free to poke holes. Basically, two reasons: 1) Uncle Sam took 40% of the profit, $15/share, and 2) they repurchased shares at $97 that were previously owned for $78.

If they just sold and went away, they made $23/share after taxes, but then they repurchased shares at a higher cost.

Yes, but their cost-basis is now higher which reduces their taxes on their next sale.

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[Monkey]

Yep, DSP was outside of any other accounts we may have already had. I didn't want to leave 175 shares just hanging there by themselves. Yes, I could transfer and would have a low base of $78/share for those 175 shares. In retrospect I should have just moved my shares rather than selling them. By doing what I did and since it seems I'm going to owe about $2650 in tax on my gains from the sale, I have only lowered my basis in the 250 total shares by a few $/share. 250 shares @ $81~$82/share after taxes are paid and the dust settles.

If I didn't have such a smooth brain, I would have bought the 250 @ $97 and transferred the 175. Thus giving me 425 shares at an average cost of $89/share. Now I have to wait for funds to transfer back to where I want to use them and then see if I can or want to still buy more. If the stock price remains $100+, then I just totally hosed myself today.

 

[kurtlikevonnegut]

Am I the only one that uses a Roth IRA stock account for things like this? No worries of long-term or short-term capital gains!

I will probably transfer whatever portion of stock I hold into my Roth when I feel the value has leveled out.

 

[mahendar]

I will probably transfer whatever portion of stock I hold into my Roth when I feel the value has leveled out.

Can we transfer DSP Shares from MS to Fidelity?

 

[xyskis]

Meeting delivery goals isn't a money problem. Rivian has plenty of money in the bank right now.

Also not entirely sure what you mean by this; my understanding was that the IPO funds would help with internal investment in the form of additional factories, expanded R&D, and to support and/or accelerate the production ramp.

 

[xyskis]

If I didn't have such a smooth brain

“Smooth Brain” ?

 

[Dbeglor]

Yes, but their cost-basis is now higher which reduces their taxes on their next sale.

Paying more for basis to reduce future tax liability is an interesting investing strategy....that's like saying I try to make less money to reduce my tax bill.

 

[Scoiatael]

Also not entirely sure what you mean by this; my understanding was that the IPO funds would help with internal investment in the form of additional factories, expanded R&D, and to support and/or accelerate the production ramp.

It will help future deliveries in 2-3 years, but will do little to solve what they are working on right now. There is a supply chain issue that money won't fix, and production hell which is something they have to figure out rather than dump money into.

 

[LaunchGreen]

Paying more for basis to reduce future tax liability is an interesting investing strategy....that's like saying I try to make less money to reduce my tax bill.

That's a misrepresentation. By your own math the person a) took a $4 profit b) has the same number of shares c) reduced further tax liability by increasing basis. By any measure better off than not doing it.

 

[TexasCrane]

Backdoor Roth.

+1. Unless you have a sizable traditional IRA, you should be funding a backdoor Roth on Jan 1 each year.

 

[Dbeglor]

That's a misrepresentation. By your own math the person a) took a $4 profit b) has the same number of shares c) reduced further tax liability by increasing basis. By any measure better off than not doing it.

Yep, I never claimed it wasn't a profitable trade. It made $700.

 

[simpsonhomer]

You can always sell a stock for a gain and re-buy it. You cannot sell a stock for a loss and then immediately re-buy it.

Wrong. Look up "wash sale". It's totally possible but you essentially postpone the write-off.

 

[jjwolf120]

It's totally possible but you essentially postpone the write-off.

That is not my understanding. There is no write-off. It is like you never sold for a loss.

https://www.investopedia.com/terms/w/washsalerule.asp

 

[simpsonhomer]

That is not my understanding. There is no write-off. It is like you never sold for a loss.

https://www.investopedia.com/terms/w/washsalerule.asp

You add the amount of the loss (from the first transaction) to the cost basis of the second transaction, effectively reducing your taxable profit by that amount.

So you can't write off the loss on the first transaction, but you reduce the taxable profit on the second transaction.

Check out the example at https://www.schwab.com/resource-center/insights/content/a-primer-on-wash-sales

 

[jjwolf120]

You add the amount of the loss (from the first transaction) to the cost basis of the second transaction,

A simpler way to think of it, is that your cost basis remains the same. It is like you never sold the stock.

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