WSJ Editorial: Rivian, the Government Unicorn

[nc10]

Link to the editorial, though behind a paywall, my apologies
https://www.wsj.com/articles/rivian...lectric-vehicles-trucks-subsidies-11636669730

1st paragraph:
We live in the age of free money and endless government subsidy, which is the only way to explain the $100 billion public stock offering by Rivian this week. The electric truck maker has delivered a mere 156 vehicles, but investors are betting government won’t let it fail..........................................

Last paragraph:
This is an extraordinary moment. We are watching the government literally underwrite a new industry before our eyes, steering capital to EV makers come what may. In post-capitalist America, you can still become a billionaire overnight—if you’re in a business favored by politicians.

The authors seem really annoyed (maybe even whiny?) by Rivian's IPO success. Seem annoyed that Rivian is not getting points deducted by investors for having a non union plant, taking advantage of lenient rules allowing pre IPO emerging growth companies to skip some Sarbanes-Oxley requirements, and the fact that Amazon will get tax credits for buying EV delivery vehicles. The short editorial also mentions legal problems with Lordstown and Workhouse, implying possible concern for Rivian.

I agree, the valuation seems completely beyond explanation, and it might even make sense to short Rivian. But I don't see the valuation being due primarily due to US government tax credits. The tax credit was not a factor in my order (though I'm happy to take it). Investors see a chance to get in early (sort of) in a promising growth industry and technology. I expect US tax credits are a factor in how fast the technology is implemented, but a transisition away from ICE vehicles will continue even without tax credits and EV's are by far the most promising alternative.

I expect Rivian's founders will also be a little annoyed by the "become a billionaire overnight" comment.

Nice picture of a black R1T in the article.

One really good point: " The electric truck maker has delivered a mere 156 vehicles ". I'm rooting for Rivian to really pick this up now, though my interests are very self serving.

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[SeaGeo]

The WSJ editorial board is hilarious.

 

[Dark-Fx]

Maybe they should have spent the last 12 years building up a new auto company from scratch before being so quick to discount what Rivian is doing. The authors are clearly delusional.

 

[manitou202]

Ah yes, but they have no problem with Trump's SPAC deal jumping 800% on the first day.

You don't have to be an expert on the stock market to see that stock prices are in a bubble at the moment.


https://www.wsj.com/articles/trump-spac-dwac-stock-what-to-know-11634918222

 

[ERI]

I’m a preordered holder, but decided at the last second not to pull the trigger the DSP (my loss). When it comes to the Valuation and IPO pop, the fundamentals just aren't there (I agree with WSJ) but as a vehicle platform/company Rivian is poised for a great future (and is now capitalized to do it). I just think Rivian is overvalued looking ahead in the short term (18-24 months). Once Normal is running at full capacity and other factories are under construction will they start to earn that valuation. (Just my opinion)

 

[Friscorays]

Bummer about March 1, 2022.

 

[Sean]

What's funny to me here is that the more capital goes into Rivian the more likely it is to succeed in hitting its scale targets. That would not only justify the valuation, but totally blow it away. Once people start to realize that, guess what they do (invest in Rivian).

 

[Fred6v]

WSJ: boo hoo the government is encouraging a new (or any) industry. Like that has never happened before?! How abt decades of encouraging/funding/subsidize polluting planet destroying fossil fuel companies. Conservative shmucks who resist change while the leaders they kiss up to deny science.

 

[Canthoney]

Ole Rupert really has an axe to grind against EVs, huh? I can’t tell you the amount of times I’ve seen negative comments about any EV on Fox News too. You would figure these people would love it, no more buying fossil fuels from hostile nations, and American made vehicles. Oh well

 

[electruck]

So far the government isn't doing any special favors for Rivian. In fact, as a non-union shop, they pretty much haven't even been acknowledged by the government. Can't read the entire piece but it is funny how they seem to single out Rivian as the beneficiary of government "subsidies". I'm assuming they also fail to acknowledge the true underlying reasons behind spurring EV adoption which goes far beyond Rivian or any other EV startup. This comes across as pure and simple WSJ paywall click-bait.

 

[JerseyGreens]

Let's not forget the government backing the Corn industry for decades leading to crap ethanol fuel in more of our ICE vehicles...

 

[moosehead]

WSJ: boo hoo the government is encouraging a new (or any) industry. Like that has never happened before?! How abt decades of encouraging/funding/subsidize polluting planet destroying fossil fuel companies. Conservative shmucks who resist change while the leaders they kiss up to deny science.

This.

Note the WSJ Editorial Board did not seem to mind either the tailwinds of 12 years of super accommodative monetary policy and corporate tax breaks that made everyone look smart. They must have forgotten too the GFC bailout of certain too big to fail financial houses.

Arbitrage off the government is a well worn path. Having it induce good outcomes is less common.

 

[yizzung]

All I can say is LOLOLOL. I cancelled my journal sub when Murdoch bought the paper almost 15 years because of, well, crap just like this. "In post-capitalist America, you can still become a billionaire overnight—if you’re in a business favored by politicians." Hahahahaha. Suddenly the WSJ recognizes that there might be some kind of revolving door between our government and our industries (but I guess it only applies to one electric car startup and not, say, big pharma, big oil, media, etc., etc., etc.) I guess they have to find new boogiemen in their spare time when they're not trying to make you blame everything on immigrants. Thanks for sharing. Had my good laugh for the morning.

 

[Zoidz]

but investors are betting government won’t let it fail..........................................

My assumption was and is that the government will let Rivian fail.

This is a quite myopic viewpoint, but not surprising. Given the Editorial Board's denial of climate change, EVs are unnecessary to battle climate change, because it doesn't exist in the first place.

 

[Trekkie]

WSJ is mad? good. Last I saw there was hardly any governmental support for Rivian, most of it is Amazon and ego man won't let Rivian fail before the US government would step in.

I'd just like to see that build count go up, and some better communication.

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