What happened
Shares of widely followed electric vehicle (EV) start-up Rivian Automotive (RIVN -2.27%) seem to be following a bit of a trading pattern. That would help explain why the stock jumped by more than 5% on Wednesday, before losing those gains and moving into the red. As of 3 p.m. ET, Rivian shares were down 1.7% for the day.
So what
A report from Bloomberg seems to have noticed the pattern with Rivian stock. And it's not unique to the EV maker, but has affected more and more names since early in 2021. The retail trading crowd that created the meme stock genre could be at work.
Image source: Rivian Automotive.
Now what
The concept of meme stocks was born only in recent years, when large numbers of small retail investors joined ranks via social media groups with the goal of trading shares effectively in large quantities to move prices. A report by Bloomberg Wednesday noted that retail interest in Rivian, among other EV names like Lucid Group, has been in the decline recently, which has caused traders to sell into recent rallies.
Analysts are looking at the trading on Fidelity's list of net buy and sell orders on its retail trading platform. The report notes the fact that until recently, there were only five days since Rivian's IPO when retail investors had been net sellers of the stock.
But before investors try and use that information to trade, it should be noted that there really are business fundamentals behind the change. Retail investors seem to have migrated from start-up names like Rivian and Lucid to Tesla. That correlates with recent news that the start-ups are cutting their production estimates amid supply chain challenges, and also suffering due to rising costs. On the other hand, Tesla seems to be navigating those headwinds well, with product price increases and continued predictions of production growth.
So while retail traders may be driving moves like the ones that occurred Wednesday, it still goes back to how investors feel the underlying business is performing. That's still where EV investors should look to decide whether relatively young start-ups are worth the risk.
