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Rivian Stock Is Giving Up Its Gigantic IPO Gains. Blame Ford and Tesla.

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Rivian stock has been highly volatile since the IPO.

Courtesy Rivian

Stock in


Rivian Automotive

is dropping again, perhaps because


Ford Motor

and the electric-truck start-up said late Friday they aren’t going to develop electric vehicles together. Not everyone is convinced that is the reason, though: Even


Tesla
,
and hope that it might split its stock, could be a factor.

While the S&P 500 and Dow Jones Industrial Average were both up about 0.7% near midday on Monday,


Rivian

(ticker: RIVN) stock was down about 15% to $108.50. That leaves it a bit less than $2 above the level of $106.75 where the stock began trading in its debut on the public market on Nov. 10.

Rivian clawed back some of the losses to close down 8.2% at $118.11. The S&P closed down 0.3%. The Dow was flat on the day.

Rivian sold shares at $78 on Nov. 9, but most investors didn’t get that bargain-priced stock. That price was paid by investors, mainly institutions, that were allocated stock by brokers running the IPO process.

Almost all the gains from the open have vanished. Friday’s news that Ford and Rivian won’t develop EVs together could be behind Monday’s loss, but the shares also may have lost ground simply because they have been incredibly volatile since the IPO.

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

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

The money-flow theory seems to hold some water. Six of the nine days Rivian has been trading, the two stocks have moved in opposite directions. Tesla shares have risen when Rivian falls, and dropped when Rivian has gained.

And Tesla shares were up 4.6% in midday trading. That jump in Tesla added about $50 billion of market capitalization to the EV leader’s shares. The peak-drop in Rivian removed about $20 billion in value from the EV upstart.

Tesla shares closed Monday up 1.7% at $1,156.87.

Money came back back into Tesla after CEO Elon Musk tweeted that Tesla might be selling the Model S Plaid edition—the company’s fastest car—in China by March 2022.

Investors, however, may be looking for more from Tesla than that. The seemingly random idea that the company might split its stock again is gaining some traction. Gary Black, manager of the

Future Fund Active ETF
(FFND), for one, believes a split might be coming.

The winding down of Elon Musk’s stock sales and new Tesla capacity coming on line in Texas and Germany could be behind the gain as well, according to Black.

Tesla didn’t respond to a request for comment about splits.

In the long run, both stocks can work if Rivian matches Tesla’s success, even to a much smaller degree, in winning a share of the EV market. But whether Rivian can sell hundreds of thousands of EVs a year just can’t be known yet.

Write to Al Root at allen.root@dowjones.com

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