To paraphrase the famous line from the Humphrey Bogart movie "The Treasure of the Sierra Madre", recent IPOs seem to be saying "Profits? We don't need no stinkin' profits!" Rivian Automotive, a maker of electric "adventure vehicles" based in Irvine California recently went public with an eye-watering first-day valuation of $105 billion. This is a higher valuation than both Ford, whose valuation is $78 billion, and GM at $90 billion.
There's just one slight problem - Rivian does not make a profit. In fact, according to Professor Jay Ritter at the University of Florida's Warrington College of Business, in the last year only about 20% of IPO's were by companies that actually made money. This is a complete reversal since the 80's, when 80% of IPOs were profitable. And it is reminiscent of 2000, when a similarly tiny percentage of IPOs were profitable - right before the dot.com crash.