Pre-market stock: Rivian is America’s largest IPO since Facebook

What happens: The company priced its stock above the expected range at $78 apiece, allowing it to raise an estimated $11.9 billion. This is the largest return for an American company since Facebook brought in $16 billion in 2012.

The IPO is the world’s largest of the year, and the 12th-largest on the list ever, according to data provider Refinitiv.

The shares started trading at $106.75, an increase of 37%. Rivian was valued at about $93 billion, more than both General Motors, which has a market capitalization of $85 billion, and Ford, which has a market capitalization of $80 billion.

The stock closed up 29% on Wednesday.

The only automakers that Rivian gets behind are Tesla, Toyota, Volkswagen and Mercedes-Benz Daimler.

What is driving the hype? After some fluctuations, stocks of electric cars are hot again. Late last month, Tesla became the first car maker Worth over $1 trillion. Shares of Lucid Motors, which recently began delivering luxury sedans, are up nearly 350% this year.

There is a huge opportunity in the market as the world tries to get rid of its dependence on fossil fuels. According to the International Energy Agency, there were 10 million electric cars on the road at the end of 2020. By 2030, that number could reach 145 million or more if governments achieve ambitious climate goals.

Investors see Rivian as a prime candidate to benefit from this shift. The company has struck a deal to deliver 100,000 vehicles to Amazon by 2025. It could also try to secure agreements with other logistics companies.

“The influx of Rivian orders and support from Amazon are key validation signals for investors,” said Asad Hussain, senior emerging technology analyst at PitchBook.

But Rivian is far from a mature company. It started producing and delivering vehicles only in September (yes, two months ago). It faces major challenges to scale manufacturing in an environment that confuses even the biggest players.

David Trainer, CEO of research firm New Constructs, told me the company’s valuation “implies a ridiculous amount of production” over the next decade.

Rivian needs to produce more than 1 million vehicles by the end of the decade to justify its rich value, according to Trainer. Tesla, which began production in 2008, delivered just under 500,000 vehicles last year.

“It took Tesla more than a decade to get to the level where the Rivian is supposed to double,” Trainer said.

In addition, it will face great competition, like traditional automakers Volkswagen (VLKAF) And general motors (GM) Investing billions in the production of their electric cars. Trainer said that ratings for companies like Tesla and Rivian seem to indicate that older brands will “all be out of business, even though many of them have made electric vehicle sales.”

Conclusion: The market is filled with liquidity as a result of unprecedented stimulus from central banks and governments. This helped drive market indices to ever higher peaks and produced a record year for initial public offerings as investors looked for new places to park their money. But amid all this euphoria, it’s important to keep an eye on the basics.

Is this the biggest rise in consumer prices since 1990?

Prices for consumers continue to rise, frustrating shoppers and worrying policymakers tasked with keeping inflation in check.

Just how important is the problem? New data released on Wednesday showed that over the past 12 months, prices have risen 6.2% – the largest increase since November 1990.

A higher CPI reading could undermine the Fed’s insistence that this phenomenon is temporary and will subside as the pandemic-related turmoil eases.

Dump the definition of “temporary” It became the favorite sport on Wall Street. Disagreement among investors has grown as companies continue to raise prices in an attempt to offset rising costs of labour, shipping and materials.

“Our basic view remains that the underlying imbalances between supply and demand will remain, as chief [Jerome] They’re largely working, leaving inflation close to the Fed’s target, Powell said last week, “Goldman Sachs strategists said in a note to clients this week.” But it is now clear that this process will take longer than initially anticipated, and that inflation beyond is likely to get worse before it gets better.”

This is only in: Tyson Foods, Conagra, and Kraft Heinz Retail customers have been informed In recent weeks they will raise prices for some frozen and chilled meats in January. Among the products that will see increases are hot dogs, Ball Park burgers and frozen breakfast Jimmy Dean, according to supplier letters reviewed by CNN Business.

Stores can choose to pass those higher prices on to shoppers so they don’t lose money.

On the radar: the cost of goods leaving China’s factories rose at a record rate last month, according to data Wednesday. There are signs that inflation is already feeding on consumers. China’s CPI rose 1.5% in October, double the rate seen in the previous month.

The end of an era for an American business icon

General Electric (Give), the industrial group founded by Thomas Edison in 1892 and a twentieth century icon of American business power Separation.

The company announced Tuesday that it will split into three separate public companies, running its businesses in aviation, healthcare and energy. Investors applauded the move, sending its stock up 2.7%.

A Step Back: Deconstructing the Sprawling Company Built by Jack Welch, Who GE drove from 1981 to 2001, shows how much the corporate world – and the marketplace – has changed over the past two decades.

At its peak in early 2001, General Electric’s stock was worth over $500 billion, making it one of the most valuable companies on the planet. But the 2008 financial crisis dealt a heavy blow to GE Capital, and the company made a disastrous bet on the fossil fuel industry when the world was turning toward cleaner, renewable energy solutions. GE had to sell the assets to offload its massive debt burden.

The rest of the company is worth only $122 billion.

The big picture: General Electric’s overhaul is part of a larger trend. Investors are pushing companies to simplify their business. Japanese Toshiba is also consider a plan To divide itself into three separate companies. last week, IBM (IBM) Weave the Infrastructure Services business under the Kyndryl name.

Strong conglomerate can rise again. But for now, at least, it’s definitely out of fashion.

the following

23andMe and Wendy report findings before US markets open. Disney (dis)and Affirm, Beyond Meat, The Honest Company and SoFi after closing.

Also today: US CPI arrives at 8:30 AM ET.

Tomorrow comes: Earnings from Tapestry, Weibo, Witty, and Lordstown Motors.

Chris Isidore contributed to the report.

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