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Rivian IPO Analysis and Details: Rivian Stock| RIVN - YouTube
Channel: Healthy, Wealthy, and Wise
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a couple of months ago i talked about
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three upcoming ipos including the one i
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said i was most personally interested in
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rivian and soon after that video right
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on cue the company confidentially filed
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for an ipo and then about a month ago
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they made their filing public
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and now this week they released more
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details in an amended filing so today
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i'll go through the highlights of the
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filing go over some of the details of
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the ipo and share some of my own
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personal thoughts on it including my
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plans on buying or passing on the stock
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so if you've been waiting for ribbian
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ipo and want all the details on it then
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this video is for you
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[Music]
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welcome to healthy wealthy and wise i'm
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kevin and we talk a lot about investing
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and improving our financial wellness on
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this channel
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and as many of you know we also focus a
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lot on ipos because there's been so much
[54]
interest in them from many of you in the
[55]
community
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now last year and the beginning of this
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year the ipo market was super hot
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but then we hit a law but there was a
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lot of companies coming out but not many
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wants to get too excited about at least
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i couldn't
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but rivian that's what i'm excited about
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and i would say a lot of you are too and
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as i told you in the preview video this
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is a company i've been personally
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interested in watching for a few years
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now
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today we'll look at the background of
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the company and what makes them
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intriguing where they're heading as a
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company details of the ipo and i'll give
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you my own thoughts on if buying rivian
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stock at the ipo makes sense
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so with that let's start with a little
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background on the company for those of
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you just learning about ribbian you
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might already know that they're an
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electric vehicle company focusing on
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segments of the market that most ev
[103]
companies hadn't started in those being
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in passenger pickup trucks and larger
[107]
suvs
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which seems a little crazy because
[110]
trucks and suvs make up a huge part of
[112]
the passenger vehicle market in the u.s
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and yet most ev automakers focused on
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traditional cars
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now having said that focusing on smaller
[120]
traditional coupes and sedans made sense
[121]
because smaller vehicles have less
[123]
weight and wind resistance resulting in
[125]
more range and efficiency as battery
[127]
technology was still evolving
[129]
and that was really important because
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one of the biggest impediments to
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widespread adoption of evs has been
[134]
range anxiety where people are worried
[136]
that their battery runs out and they're
[137]
left stranded
[139]
now back to rivien what some of you may
[141]
not know is that the company didn't
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actually set out to be a truck and suv
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ev company back in 2009 they actually
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looked to develop a sports car but by
[149]
2012 the strategy began to move away
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from building an efficient sports car
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and the company began moving in the
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direction that they're at today
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and that left rivien finding its niche
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in the growing ev market by focusing on
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trucks and suvs where most other ev
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companies hadn't gone
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and even since they developed that
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change in strategy close to 10 years ago
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now there still hadn't been a competing
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ev truck come to the market while tesla
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and the traditional automakers have made
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plans to bring a passenger truck to
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market including ford
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who has invested in rivian and holds
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around a 5 stake in the company
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rivian was able to start from the bottom
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up in building their company and
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delivering their first orders of their
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truck in september of this year
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allowing them to have the cachet of
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being the first company to bring an
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electric pickup truck to the consumer
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market
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so let's talk a little bit about the
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three initial products rivien is
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bringing to market which if they do well
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could likely set the company up for big
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future successes
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the first one is the truck named the r1t
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which as i mentioned has already started
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deliveries the r1t is a two row five
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passenger pickup truck that at a length
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of 218 inches
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puts it within the mid-sized truck
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market think of the chevy colorado or
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the toyota tacoma as a comparison
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now of course what separates rivien from
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those trucks is that it's all electric
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which means that driving range is a big
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consideration
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particularly for more rural areas of the
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country where trucks are really popular
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and where people generally have to drive
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further to get to the places they need
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to go
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so to that point for the r1t at launch
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the driving range on a full charge is
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reported to be 314 miles however by as
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soon as next year they're looking to
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increase that by delivering trucks with
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a range option of over 400 miles now the
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big question for someone considering
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buying the r1t is is this a real truck
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and that's an important question if
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you're also looking to invest in the
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company because if consumers don't see
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it meeting the needs of a truck then the
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product will ultimately fail
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so without the luxury of being able to
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test one
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although if rivien were to send me one
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i'd review it for you guys so your move
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rivien
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but since i don't have one i have to
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look at some of the stats and specs that
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have been released and as far as the eye
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test goes
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i think the truck would compete very
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well in the mid-size truck segment
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the bed isn't huge at four and a half
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feet long but it is competitive in size
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with its crew cab short bed competitors
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but what does separated is that it does
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have the ability to tow eleven thousand
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pounds way outpacing the colorado tacoma
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and the ford ranger
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and as far as off-roading capabilities
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its quad motor all-wheel drive
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configuration provides instant power and
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response while independently adjusting
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torque at each wheel for optimal
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traction
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propelling the truck from zero to 60
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miles per hour in approximately three
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seconds
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and according to rivian each vehicle can
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weight in up to three feet of water and
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avoid obstacles with up to 15 inches of
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ground clearance so they definitely want
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you to see it has the off-road
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credentials that its marketing leads you
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to believe it would have
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okay so that's the r1t truck obviously
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this isn't a product review so we're not
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going to go over everything it does or
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talk about all the optional accessories
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the purpose of this video is for us to
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make sure that the product makes the
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company viable and therefore investable
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so hopefully the details i share with
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you help you decide if the truck can be
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competitive in the market
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now let's talk about the suv and it's
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named the r1s the r1s is based on the
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same r1 platform as the truck and unlike
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some electric suvs it has enough space
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to comfortably fit up to seven
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passengers
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having the same platform it has similar
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capabilities to the r1t so in the
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interest of time i won't repeat all of
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that but some of the major differences
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are that it's a little shorter at 202
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inches and its towing capacity comes at
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a lower 7 700 pounds
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ribbian was sure to put the utility in a
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sport utility vehicle as it has a
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flexible interior form factor that can
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either fit more occupants or more cargo
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as the rear seats can be folded as
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needed
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as far as a timeline for the suv being
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available rivian looks to start
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delivering orders of the r1s in december
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so those are the two initial products
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rivien has for the consumer market
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but i mentioned there were three
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products because they also have a
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commercial product waiting in the wings
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and this is a very intriguing part of
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the rivien ipo story
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in the commercial market the company
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will launch the ribbian commercial
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vehicle platform with their first
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vehicle called the electric delivery van
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or as they call it the edv
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the edv was designed and engineered by
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rivien in collaboration with amazon a
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company that not only initially invested
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in rivian and holds about a 20 ownership
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stake but who also became their first
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official customer
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in september 2019 they entered into an
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agreement with amazon under which amazon
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ordered 100 000 edvs now as per the
[432]
prospectus ribbing expects to deliver at
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least their first 10 vehicles to amazon
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in the month of december of this year
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and then they plan to deliver the rest
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of the 100 000 edvs by 2025 and then
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look to further continue the
[444]
relationship with amazon
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the edd will be building 500 700 and 900
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cubic feet sizes the 500 and 700 size
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vans are planned to launch first and
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then the 900 will come later
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each of the configurations are expected
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to have up to a 150 mile range
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okay so that's what ribbian brings to
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the table as far as the products they'll
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be selling
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typically this is where i would dig into
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the financials to see what kind of
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growth they're having and for the sake
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of due diligence i'll touch on it but
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obviously since they are just now
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beginning to deliver orders there's not
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much revenue to talk about so for all
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intents and purposes other than some
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interest received on some invested money
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their income is essentially zero
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now on the expense side that's a much
[487]
different story so let's see what rivien
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is reporting as far as where they are
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spending their money
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first up are the operating expenses you
[495]
can see that in the first six months of
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2021 as they were ramping up to release
[498]
their vehicles by the end of the year
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that their losses almost equal their
[502]
entire losses of 2020 which was around a
[504]
billion dollars and not surprisingly
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two-thirds of their losses were spent on
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research and development
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the rest of the expenses were mostly
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focused on scaling their operations and
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administrative purposes
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now needless to say if you're
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considering buying into the ribbian ipo
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you're looking at the future and what
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the company can generate
[523]
so let's look at some numbers here
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right now the company reports it can
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manufacture 150 000 vehicles annually at
[530]
its illinois plant and they look to
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increase that number to 200 000 by 2023
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and they're also looking to buy a second
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factory which of course will cost a lot
[539]
more money
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in fact rivian is expecting to spend
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another eight billion dollars in the
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next two years
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keep that eight billion dollars in mind
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we're gonna come back to that number
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anyways that eight billion dollars is on
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top of the 10 billion that they've
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already spent to get this far
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starting a car company isn't cheap
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as of their filing the company had just
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under 50 000 pre-orders of their
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consumer vehicles
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to buy one whether the truck or the suv
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each will cost around seventy thousand
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dollars
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so if we simplify this and say that
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now of course review not the profit
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that's just the revenue and that's
[578]
probably on the low side because the
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company is looking for other ways to
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generate additional revenue from each of
[583]
the vehicles they sell
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in fact in the s1 filing the company
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states some exceptions they assume that
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from each vehicle they sell they'll earn
[590]
about an additional fifteen thousand
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five hundred dollars which includes
[593]
autonomous driving capabilities of ten
[595]
thousand dollars and a monthly
[597]
subscription plan for infotainment
[598]
connectivity diagnostics and other
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services valued at fifty five hundred
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dollars
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they also expect to earn lifetime
[605]
revenue of 3 500 for the service of each
[607]
vehicle in additional revenue for
[609]
financing as well as additional revenue
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for their commercial vehicles
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when they add in the resale of the
[615]
vehicles ribbian believes that the total
[617]
additional revenue that they can obtain
[618]
from each vehicle sold so this is on top
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of the original price is sixty seven
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thousand nine hundred dollars for each
[625]
consumer vehicle and sixty four thousand
[627]
six hundred dollars for each commercial
[628]
vehicle
[630]
so you can start to see the additional
[631]
value rivien will have by getting
[633]
customers into their ecosystem
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basically each vehicle sold could
[636]
generate almost twice the revenue of the
[638]
initial sale price according to their
[639]
projections
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okay so let's get to the rivia and ipo
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itself as of this recording rivien is
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expecting to raise about eight billion
[647]
dollars remember that was the number i
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said to keep in mind for the amount of
[651]
money that they would need over the next
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two years well here at the ipo is where
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that money is coming from
[656]
and they'll do this by planning to sell
[658]
135 million shares of class a rivien
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stock within a range of 57 to 62 dollars
[662]
at their ipo as stated in their latest
[664]
amended s1 filing that came out this
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week
[667]
if priced at the midpoint of the
[668]
proposed range rivian would command a
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fully diluted market value of 57.1
[673]
billion dollars
[675]
now i'll get back to some thoughts on
[676]
this valuation in a minute but first i
[678]
want to tell you more about the ipo
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as far as how to find it rivian stock
[683]
will trade under the ticker rivn
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and as to when it will start trading i
[688]
don't have this exactly nailed down yet
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but it looks to start trading the week
[691]
of november 8th with some early
[693]
indications that trading will begin on
[694]
wednesday november 10th
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now don't hold me to the exact date at
[698]
this point but when i do have a firm
[700]
date i'll let you guys know so
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definitely make sure you have your
[703]
notification bell turned on so you'll
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know as soon as i share it
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and then after it starts trading rivian
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will follow a standard 180-day lock-up
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for pre-ipo shares
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if you're not sure what lock-up
[714]
agreements are and why they're important
[715]
to be aware of i'll link some
[717]
information on them for you in the
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description
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all right so what do i think of buying
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ribbian stock after it ipos
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obviously as i've already told you guys
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i've been interested in rivian for a
[727]
long time so buying into the actual
[729]
company is intriguing to me
[731]
the big pluses for me are that they
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achieve first mover status by being the
[734]
first company to bring an electric
[736]
pickup truck to market and it does seem
[738]
to be a legit truck that could compete
[740]
well in the mid-size consumer market and
[742]
i've seen some independent reviews that
[743]
seem to support this
[745]
another big thing is its relationship
[747]
with amazon
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not only as an investor in the company
[750]
but also being a customer without
[751]
agreement of them buying 100 000 edvs
[754]
within the next five years
[756]
now a couple of negatives number one is
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that it's a new company that will likely
[760]
have growing pains when it comes to
[761]
production to me that's pretty much
[763]
inevitable particularly in a near-term
[766]
environment with supply chain issues
[768]
but even aside from that look at tesla
[770]
as an example they weren't flawless in
[773]
their execution and they had some of
[774]
their own growing pains in which there
[776]
were a lot of concerns
[777]
until even just a couple of years ago
[779]
that they could deliver on what they
[780]
were projecting
[782]
and by that point they were already
[784]
selling cars and still had those
[785]
concerns out there
[786]
and to go along with this the segments
[788]
that rivian is initially targeting are
[790]
segments for the competition is looking
[792]
to enter as soon as early next year
[794]
in the preview video i talked about
[796]
tesla cyber truck being a competitor but
[798]
i said maybe not as direct as you might
[800]
think because of the styling ribbian is
[802]
targeting more of the traditional truck
[803]
market by its design whereas the tesla
[805]
look is completely different with a lot
[807]
of people calling it futuristic but
[809]
whatever you call it people either love
[811]
or hate the look of it myself i know i
[814]
definitely prefer the look of the rivian
[815]
over the tesla now which one do you guys
[817]
prefer let me know in the comments i'm
[819]
curious what you guys think
[821]
now i think the underlying technology is
[823]
where the true competition with tesla
[824]
could be and that will be interesting to
[826]
see how that plays out on the other hand
[828]
a company such as ford which as i said
[830]
before is an investor in the company
[833]
could emerge as a bigger competitor by
[834]
electrifying its f-150 a truck that in
[837]
many years is the overall best-selling
[840]
vehicle in the u.s
[841]
recently ford has reported that it has
[843]
160 000 orders for the electric version
[846]
of this truck that is expected to
[847]
release in the spring of 2022 with a
[850]
predicted entry price of around 40 000
[853]
and that price point could potentially
[854]
really hurt rivien depending how the
[856]
electric ford truck turns out
[858]
plus being that the f-150 is a bigger
[860]
truck it may not be a direct competitor
[862]
but it could appeal to truck drivers who
[864]
feel bigger is better and if the pricing
[866]
ends up being lower than rivien that
[868]
could hurt now on top of that there are
[870]
expectations of a mid-sized electric
[872]
ranger coming to market as well which
[874]
would be the most direct competitor yet
[876]
but the timeline on this is sort of
[877]
vague at this point although it appears
[879]
that 2025 could be the target
[881]
in that case rivien would have a couple
[883]
of years head start in this segment
[884]
which would be huge
[887]
okay so the other big thing is the price
[888]
to buy into rivian's ipo so right off
[891]
the bat we know it's not going to be
[892]
cheap at a current expected valuation of
[894]
just under 60 billion dollars
[897]
this is actually less than the 80
[898]
billion valuation that was predicted
[900]
however that still doesn't make it cheap
[902]
as a comparison to automotive behemoth
[904]
and investor ford who has been around
[906]
for over 100 years and sold millions and
[908]
millions of vehicles
[910]
ford is worth around 70 billion as i
[912]
record this whereas rivien has delivered
[914]
only 156 of their trucks by the end of
[916]
october and could go public close to
[918]
that evaluation so yeah the valuation is
[921]
all about the future growth not at all
[923]
at the current sales
[924]
in the valuation in the 50 to 60 billion
[927]
dollar range we're talking about for
[928]
rivien is assuming that the ipo won't
[930]
price above the range or get upsized
[933]
which i would very much anticipate to
[934]
happen considering the interest in the
[936]
company again i'll update the community
[938]
if that happens
[939]
now as a comparison to the valuation
[941]
that rivien was last pegged at it came
[943]
at just under 28 billion dollars in
[945]
january so the valuation is expected to
[947]
double at the very least in under a year
[950]
the good thing is that the company is
[952]
now producing and delivering vehicles so
[953]
that's a huge milestone that's been
[955]
achieved and i'm sure it's a big part of
[957]
the timing of the rivian ipo and how it
[958]
can price its shares more aggressively
[960]
so at this point the big question is
[963]
will i buy into the ipo
[965]
for those of you have been with me for a
[966]
while you know i always come back to
[968]
price and that's one of the big issues
[969]
here
[970]
there's a lot to like about rivien and i
[972]
do like them but i realize to buy to the
[974]
company is going to come out of premium
[977]
plus i'm worried about the rate of the
[979]
increasing competition and the time
[980]
frame competitors look to get into the
[982]
market ceridian is not a company that i
[984]
can easily say i'll hold a couple of
[986]
years and see how it pans out
[988]
it needs to deliver consistently quarter
[990]
over quarter out of the gate the luxury
[992]
of time is not on their side
[994]
because of my long-term interest in the
[996]
company my heart says to start with a
[998]
small position and then add to when it
[1000]
makes sense
[1001]
on the other hand my mind says that
[1003]
having to share the market with deeper
[1004]
pocketed companies sooner than later
[1006]
makes it a risky trade particularly if
[1008]
the stock comes out as hot as i would
[1010]
expect and i probably should stay away
[1012]
from it so what will i likely do
[1015]
first i'm not telling you what you
[1016]
should do because i never tell anyone
[1018]
what to do with their own hard-earned
[1019]
money but for me if the rivian stock
[1022]
comes out within 20 or so of its ipo
[1024]
price i'll probably take a small
[1026]
position and then as i said before
[1028]
consider adding to it over time when it
[1030]
makes sense
[1031]
that way i'll try to balance my own
[1033]
personal fomo tendencies and issues with
[1035]
my logical identification of risk
[1037]
factors which would typically keep me
[1038]
away from it
[1040]
even if it trades lower than i think i
[1042]
don't see myself going all in on rivian
[1044]
stock it's just going to be too
[1045]
expensive and too risky for my tastes
[1047]
based on all the factors we've touched
[1049]
on
[1049]
25 years of experience investing in the
[1051]
stock market tells me that
[1053]
so that's my take
[1055]
what's yours are you buying into the
[1057]
rivien ipo let me know in the comments i
[1060]
always enjoy hearing what everyone in
[1061]
the community thinks
[1062]
and i hope you found the video helpful
[1064]
and if you did please like it and share
[1066]
with anyone you think would find it
[1067]
interesting we're always looking to grow
[1068]
our community so that we can have more
[1070]
ideas shared in the comments so if
[1072]
you're new here definitely consider
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subscribing it's totally free and it'll
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