Rivian founder RJ Scaringe is worth $ 2.2 billion after the company’s IPO


RJ Scaringe, Founder and CEO of Rivian, speaks during a unveiling ceremony ahead of the Los Angeles Auto Show on November 27, 2018.

Patrick T. Fallon | Bloomberg | Getty Images

After the first two days of trading in 2010, the electric vehicle maker Tesla had a market capitalization of just over $ 2 billion.

This is how much RJ Scaringe, CEO of electric vehicle maker Rivian, is worth after day two of his business in the public market.

Rivian’s shares rose 57% in the first two days on the Nasdaq, giving the company a market cap of nearly $ 105 billion. Scaringe, who founded Rivian in 2009, owns 17.6 million shares valued at $ 2.2 billion, based on Thursday’s closing price of $ 122.99.

Scaringe, 38, attracted investors with his vision for an electric vehicle company that will sell to both consumers looking to go electric and companies trying to drastically reduce their reliance on fossil fuels. In his letter to shareholders in the IPO prospectus, Scaringe said that in 2012 he moved away from trying to build an “efficient sports car” and focused on “maximizing impact”.

“We started thinking about the truck, SUV and crossover segments as they presented a tremendous opportunity for us to demonstrate how a clean, technology-driven vehicle could eliminate long-accepted tradeoffs,” wrote Scaringe. “We wanted to establish our brand by offering a combination of efficiency, on-road performance, off-road ability, functional use and product refinement that simply didn’t exist on the market.”

Read more about electric vehicles from CNBC Pro

The company says it has 55,400 pre-orders for its R1S SUV and R1T pickup, and has a contract with Amazon to build 100,000 electric vans by 2030. Reliance on Rivian to assemble the vehicles and deliver them profitably, however, is a huge risk for investors, who are, who the company already rates the company higher than traditional auto giants Ford and General Motors. The company has never had sales and expects third quarter sales to be less than $ 1 million.

But business fundamentals aren’t driving the current surge in EV stocks.

Since Tesla’s relatively lukewarm IPO in 2010, the electric vehicle market has become a speculator’s haven, with Tesla serving as a catalyst. On a split-adjusted basis, Tesla went public for $ 3.40 per share. It closed at $ 1,063.51 on Thursday and is one of only five U.S. companies valued at over $ 1 trillion.

Others in the industry have skyrocketed lately, with China’s Nio valued at $ 69 billion.

Nio reported revenue of approximately $ 1.5 billion and an operating loss of over $ 150 million for the third quarter.

Lucid confirmed just last month that first customer deliveries of its $ 169,000 Air Dream Edition sedan would begin. In its presentation to investors, the company expected annual sales of 97 million US dollars.

Fear is in control

Tesla is the only company in the group that has grown into a profitable, high-growth company, but it’s still an auto company that acts like a software maker. Much of the hype has to do with exuberant CEO Elon Musk, the richest person in the world. He has nearly $ 300 billion in net worth tied primarily to his Tesla holdings.

Scaringe, who holds a PhD in mechanical engineering from the Massachusetts Institute of Technology, is a long way from Musk’s financial brand. But he has created a similar ownership structure that gives him over-sized authority.

Rivian, based in Irvine, California, has two classes of shares. Scaringe owns only 1% of Class A shares or the shares held by the broader investor base and available for trading. But he owns 100% of the Class B shares, and each has 10 times the voting rights of a Class A share.

If you add it all up, Scaringe, who is also the chairman of the board, has 9.5% voting rights. His right of veto is even greater. Because in order to make major changes at board level or in the company’s articles of association, the holders of at least 80% of the class B shares would have to participate.

In addition to its high stock holdings, Scaringe has the ability to grow its wealth dramatically when the company is doing well. In January, the Board of Directors approved a time-based allocation of 6.8 million shares and an allocation of 20.4 million shares, which will be transferred in 12 installments depending on where the shares are traded.

The company acknowledges in its prospectus that a bet on Rivian is a bet on Scaringe.

“We are heavily dependent on the services and reputation of Robert J. Scaringe, our founder and chief executive officer,” said the company in the “Risk Factors” section of the application. “Dr. Scaringe has a significant influence on our business plan and drives our business plan. If Dr. Scaringe were to cease serving due to death, disability or any other reason, or if his reputation is affected by personal acts or omissions or other events within or outside of his control we would be severely disadvantaged. “

Scaringe isn’t the only one generating a godsend with his company’s IPO. Rivian’s financiers are sitting on even larger sums.

Amazon, which has invested more than $ 1.3 billion in Rivian, has a stake worth $ 19.7 billion as of Thursday’s close. The company announced in September that its holdings, including Rivian, were valued at $ 3.8 billion.

T. Rowe Price and his funds own over $ 16 billion worth of Rivian stock. Global Oryx, a unit of the Saudi Arabian Abdul Latif Jameel Companies, controls approximately $ 14 billion worth of stocks, while Ford has a stake of $ 12.6 billion.

SEE: Who is Rivian’s billionaire founder?