Valuations in the auto sector are in focus right now. Indeed, the initial public offering today of Rivian (NASDAQ:RIVN) has shone a spotlight on these companies. This comes as RIVN stock has shot more than 25% higher in its first day of trading. Not only is this performance impressive, it follows the electric vehicle startup raising nearly $12 billion in its debut.
Rivian started its IPO day off on a strong foot, raising money at a per-share price of $78. From there, the stock really took off, briefly touching a high just below $120.
This valuation, for a company that lost nearly $1 billion during the first half of this year, is also impressive. It also is causing investors to pay closer attention to other electric vehicle stocks in a growing market.
While no company has yet come to market and challenged the dominance of Tesla (NASDAQ:TSLA) at scale, investors seem to think Rivian has a shot. As a result of this potential, investors appear to be betting on a new, oligopolistic future for the EV industry.
And it’s not just investors thinking this way. Comments today from General Motors (NYSE:GM) CEO Mary Barra have reignited this discussion.
Let’s dive then into what investors are watching on Wednesday as Rivian goes public.
Barra: GM Is Undervalued Relative to RIVN Stock, Competition
Ether Rivian is overvalued, or GM is undervalued. Such a realization seems pretty obvious. But for GM CEO Mary Barra, it appears the latter is likely the case.
Given the impressive valuations EV stocks have received, many traditional automakers making the switch toward all-electric fleets aren’t seeing the same love. Investors appear to be focused on what’s new and exciting, rather than what exists and is profitable.
According to Barra, “What it highlights to me is the huge opportunity. General Motors is so undervalued.” There’s certainly reason for value investors to agree.
That said, the Rivian IPO is one that has many investors bullish on the future of the electric vehicle market. Whether a rising tide lifts all boats in the auto sector remains to be seen. GM stock has done quite well over the past year, and it hasn’t gotten the same love as Tesla or Rivian. That adds some weight — and reason for attention — to Barra’s comments.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
