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Which Will Be a Better IPO: Coupang or Rivian?

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In the race to a $100 billion valuation, who wins: the fast-growing e-commerce platform, or the electric vehicle start-up?

The market for initial public offerings (IPO) has been hot over the past year and shows no signs of cooling. Unicorns, or companies worth more than $1 billion, have become the rule rather than the exception, with a growing number of start-ups easily eclipsing this benchmark. Electric vehicle maker Rivian is planning to make its debut later this year, while Korean e-commerce platform Coupang is planning to go public as early as next month. These highly anticipated debuts are expected to fetch valuations in the neighborhood of $50 billion.

On this clip from Motley Fool Live recorded on Feb. 12, "The Wrap" host Jason Hall and Fool.com contributors Danny Vena and Jamal Carnette discuss the market opportunity for these up-and-comers and which one has the potential to double first.

Jason Hall: We have two companies that are planning to IPO, traditional IPO this year. The first one is Korean e-commerce company, Coupang, C-O-U-P-A-N-G, are going to potentially go public, I think next month. I think in March is what they are aiming for. Then later this year, Rivian is looking to go public. I think Rivian is aiming for September.

Real quickly is one thing essentially with Rivian is they're going to wait till after they've started selling a product. So they're going to wait till after they actually have revenue. We get back to that thing with their model. Coupang is already huge, and they're growing like wildfire.

Here's the question that I thought it would be fun to pointlessly prognosticate on, they both are aiming for a $50-billion valuation, that's a huge valuation, the question is, which one gets to $100 billion fastest? Jamal?

Jamal Carnette: Well, in a foot race of me versus Usain Bolt, and if I get a couple of months' head start, I will probably win that race, probably not, but still. [laughs] Just for that mere reason, I'm going with Coupang. It's a huge, South Korean company. As I stated earlier, the geographical next-Amazon (AMZN 1.42%) plays are smoking hot right now. I believe SoftBank (SFTB.Y -0.82%) is behind this.

Jason Hall: They have a huge stake.

Jamal Carnette: Yeah, they have a huge stake, and I just think that they are going to probably even get there before even Rivian comes to market.

Jason Hall: I think they will, but let's say they do it in six months. Rivian goes public in September. Can they do it in five months? [laughs] Maybe, I don't know.

Jamal Carnette: You have Amazon versus SoftBank, pushing these two?

Jason Hall: You do, well, but the other thing too is Rivian, I think, has Ford (F -2.46%) in their pocket or in their corner.

Jamal Carnette: I don't know what's going to happen post-IPO, but they have a board member, one of the C-suite is a board member on Rivian. There's certainly a lot of deep, strategic relationships on that board.

Jason Hall: Danny, what do you think here? Do you think the Korean e-commerce company, Coupang, can get to $100 billion faster or Rivian, can do it faster?

Danny Vena: I'm going to preface this by saying, if you look at what's been happening in e-commerce in the developing world, and let's use MercadoLibre (MELI -0.73%) as an example. Their revenue last quarter, was triple-digits, growth of 100%, compared to the prior year quarter.

What you're going to see is, I think Coupang is going to come to market, there's going to be a ridiculous amount of demand. You're saying that they're shooting for $50 billion valuation? It's probably going to be $75 billion before the IPO kicks off. Then on the first day of trading, it might get to $100 billion then. I'm going to go with Coupang not only because it's going to have a 3 month advantage, but also because e-commerce is on a hot streak.

Jason Hall: Absolutely, yeah and it's certainly going to have proven. This is a company that grew revenues 90% last year, so they already have a head start in terms of their proven viability. Jamal?

Jamal Carnette: The only push-back there I would say if there is anything that has probably been just as hot as e-commerce over the last year, it's been the EV [electric vehicle] space, so fully agree with you, Danny, but also the EV space is smoking hot. Rivian goes faster than expected, these prognostications could be truly pointless.

Jason Hall: Yeah, well, the funny thing about it, the bottom line is Rivian is going to have a major problem to deal with. It's actually going to have revenues when it goes public, [laughs] and none of these others do. [laughs] People will actually have something to anchor their expectations on. That could blow the whole thing up. I'm not even going to guess.

You know what? It's going to be Coupang. Coupang's going to be the better investment whether you're talking a year or 10 years. It's e-commerce; there's leverage and there's scalability that you don't get when you're making trucks.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$108.92 (1.42%) $1.52
Ford Motor Company Stock Quote
Ford Motor Company
F
$11.52 (-2.46%) $0.29
Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
MELI
$660.13 (-0.73%) $-4.87
SoftBank Group Corp. Stock Quote
SoftBank Group Corp.
SFTB.Y
$19.37 (-0.82%) $0.16

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