Amazon suffered a $7.6 billion loss on Rivian’s share due to a drop in shares in the first quarter
RJ Scaringe, 35-year-old CEO of Rivian, unveils his company’s R1T all-electric pickup truck and R1S all-electric SUV at the Auto Show in Los Angeles, California on November 27, 2018
Mike Blake | Reuters
Amazon invested in electric car maker Rivian in 2019 as part of a plan to go green. During the first quarter, he saw nothing but red.
In its earnings report Thursday, Amazon posted a $7.6 billion loss due to its stake in Rivian. Shares in the electric car maker have fallen more than 50% in the first three months of 2022, reversing course from the fourth quarter when the company debuted on the stock market and its value skyrocketed.
While Amazon has big ambitions for Rivian, having signed an agreement to produce 100,000 delivery vehicles by 2030, current market conditions are challenging. Rivian said last month that the company expects to produce just 25,000 electric trucks and SUVs this year, half of the number predicted by investors last year as part of its IPO roadshow.
Like most manufacturers, Rivian is struggling with supply chain constraints and internal manufacturing issues. But Rivian was valued at $86 billion after its IPO, making the stock particularly vulnerable to a severe pullback.
Fall of Rivian in 2022
The Nasdaq Composite fell 9.1% in the first quarter, the worst period since the first quarter of 2020, when the Covid-19 pandemic began. The riskiest bets were hit the hardest as investors switched to assets deemed safer at a time of rising inflation and interest rates.
Rivian’s decline continued into the second quarter, when shares fell another 36%. It is now more than 80% below the November high.
On Wednesday, Ford posted a $5.4 billion loss on its 12% stake in Rivian. According to FactSet, Amazon owns approximately 18% of the shares, investing more than $1.3 billion in the company in total.
Amazon’s markdown is particularly large, but it’s not the only tech company to lose out on its equity investment.
Earlier this week Alphabet recorded a $1.07 billion loss on his investment “taking into account market volatility”. Alphabet’s investment arm has backed companies like UiPath, Freshworks, Lyft, and Duolingo that have been mired in a market swoon.
Microsoft said this week that its first-quarter earnings were down $174 million due in part to “mark-to-market losses on our stock portfolio.” And last week, Snap said it had a $92 million unrealized loss “from an investment that went public in the second half of 2021.”
LOOK: Rivian’s CEO is confident that the company will be able to produce 25,000 vehicles this year.