Office Hours: Rivian’s Colossal IPO, Fashion Industry Winners, and Pivoting Out of an Ad Agency

IPO Pricing

Scott Galloway explains the intricacies of Rivian's IPO pricing, highlighting the role of underwriters in gauging institutional demand. They aim to price shares slightly below market value to create a positive brand perception and avoid a "broken IPO." Scott shares his experience with Airbnb's IPO, emphasizing that adjusting the price based on demand is standard practice, not shady behavior 1. He also notes the disparity in access between institutional and retail investors, where the latter often miss out on initial pricing benefits 2.

Nothing shady here. That's part of the process.

--- Scott Galloway

Rivian's IPO exemplifies this, with prices initially set between $57 and $62, later adjusted to $72 or $74 due to high demand 3.

   

Valuation Concerns

Scott critiques Rivian's market valuation, comparing it to traditional automobile giants like GM and Ford. He finds it perplexing that Rivian's valuation surpasses these companies despite not having sold a single car 3. Scott argues that the perceived total addressable market (TAM) for electric vehicle companies like Rivian, Tesla, and Lucid is inflated, as they position themselves as climate change solutions rather than just car manufacturers 2.

They've managed to do this incredible gymnastic move where their TAM is not the automobile industry, their TAM is more climate change.

--- Scott Galloway

He expresses skepticism about the sustainability of such valuations, cautioning investors to "look out below" in the electric vehicle space.