Startup Valuation : Rivian Case Study
This research paper is structured in three main sections which provide a comprehensive view of startup valuation. Firstly, the startup concept is covered in detail to establish the foundation for understanding the specific valuation methods of this type of company which are analyzed in the second se...
| Autor: | |
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| Tipo de recurso: | tesis de maestría |
| Fecha de publicación: | 2023 |
| País: | España |
| Institución: | Universitat Politècnica de Catalunya (UPC) |
| Repositorio: | UPCommons. Portal del coneixement obert de la UPC |
| Idioma: | inglés |
| OAI Identifier: | oai:upcommons.upc.edu:2117/396202 |
| Acceso en línea: | https://hdl.handle.net/2117/396202 |
| Access Level: | acceso abierto |
| Palabra clave: | Empreses -- Creació -- Finances -- Auditing New business enterprises -- Valuation -- Case studies Automobile industry and trade -- Valuation New business enterprises -- Finance -- Auditoria Empreses -- Creació -- Valoració -- Estudi de casos Automòbils -- Indústria i comerç -- Valoració Àrees temàtiques de la UPC::Economia i organització d'empreses::Comptabilitat i control financer |
| Sumario: | This research paper is structured in three main sections which provide a comprehensive view of startup valuation. Firstly, the startup concept is covered in detail to establish the foundation for understanding the specific valuation methods of this type of company which are analyzed in the second section. Furthermore, the valuation concepts studied are put into practice with a real case study, valuing the startup Rivian. In the first section, the startup concept is thoroughly explained together with the main attributes that characterize them. In addition, the maturity stages that startups go through during their lifecycle are analyzed. Recognizing the inherent high risk of startups, and how it evolves as they mature, is crucial to understand the different types of funding that startups receive at each maturity stage. The second section explores several valuation methods that are particularly relevant in the valuation process of a startup. The section consists of five traditional methods widely used in the valuation industry and six alternative methods especially designated to adapt valuation to the particularities of young growth companies. Moreover, the impact of the macroeconomic outlook on valuations is analyzed, including the effect of interest rates. The last section aims at valuing the startup Rivian. First of all, an overview of the company, the market, and the competitive landscape is presented. Rivian is an American high-technology electric vehicle manufacturer which targets the consumer and commercial segments of the market. The company is rapidly growing its sales, which are sustained by an increasing workforce and large investments in R&D and CapEx, however, Rivian is not being able to achieve positive gross margins at the moment. The global car market seems to have stagnated in recent years; however, the electric segment is expected to grow fast in the following years. There are many manufacturers competing in this fragmented industry, but many of them are traditional ICE players which might be lagging in EV development. Rivian’s share price has decreased sharply since its IPO at the end of 2021. In the last year, its stock price has ranged from $12 to $40, being on April 30th, 2023, in the lowest part of the spectrum at $12.8. After conducting the valuation using the above-mentioned methodologies, Rivian’s targeted share price should be between $18 and $22. However, the difficulty of precisely forecasting the financials of a startup combined with the current macroeconomic uncertainty and stock market turmoil due to the war in Ukraine makes an accurate valuation particularly complex |
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