Rivian Stock abandons its IPO gains. Blame Ford and Tesla.

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Rivian stock has been very volatile since the IPO. Courtesy of Rivian

Rivian Automotive shares are falling again, possibly because Ford Motor and the electric truck startup said Friday night they would not develop electric vehicles together. However, not everyone is convinced that’s the reason: even Tesla, and is hoping he could split his shares, could be a factor.

While the S&P 500 and the Dow Jones Industrial Average were both up around 0.7% around noon Monday, Rivian stock (ticker: RIVN) was down around 15% to $ 108.50. That leaves it just under $ 2 above the $ 106.75 level where the stock started trading for its public market debut on November 10.

Rivian sold shares for $ 78 on November 9, but most investors did not get those shares cheaply. This price was paid by investors, mostly institutions, who were awarded shares by brokers performing the IPO process.

Almost all of the open gains are gone. Friday’s news that Ford and Rivian won’t develop electric vehicles together could be the reason for Monday’s loss, but stocks may also have lost ground simply because they’ve been incredibly volatile since the introduction. in stock exchange.

Rivian’s 4.2% gain on Friday was the smallest daily move, up or down, since the IPO.

A third reason for Monday’s weakness appears to be Tesla (TSLA). Nicolas Colas of Data Trek Research wrote shortly after Rivian’s IPO that money could flow out of Tesla shares and into Rivian shares. He has seen investors sell off part of their Tesla stakes to buy Rivian, seen as potentially the next big thing.

The cash flow theory seems to be holding up. Six of Rivian’s nine trading days, the two stocks moved in opposite directions. Tesla’s shares rose when Rivian fell and fell when Rivian won.

And Tesla shares rose 4.6% in Monday’s trading. Tesla’s surge adds around $ 50 billion in market capitalization to shares of the electric vehicle leader. Rivian’s latest drop takes about $ 20 billion in value from the upstart of the VE.

The money is coming back to Tesla after CEO Elon Musk tweeted that Tesla could sell the Model S Plaid Edition – the company’s fastest car – in China by March 2022.

Investors, however, can expect more from Tesla than that. The seemingly haphazard idea that the company might divide its shares again is gaining traction. Gary Black, manager of the Future Fund Active ETF (FFND), for his part, believes a split may be ahead.

The gradual reduction in sales of Elon Musk shares and the commissioning of new Tesla capacity in Texas and Germany could also be behind the gain, according to Black.

Tesla did not respond to a request for comment on the splits.

In the long run, both actions may work if Rivian matches Tesla’s success, even to a lesser extent, in gaining market share in electric vehicles. But it’s not yet clear whether Rivian can sell hundreds of thousands of electric vehicles a year.

Write to Al Root at [email protected]

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