In 2019, Amazon made a green investment in Rivian, an electric vehicle manufacturer. It saw nothing but red throughout the opening quarter. Amazon reported a $7.6 billion loss on its Rivian stock in its earnings release on Thursday. In the first three months of 2022, shares of the electric vehicle maker fell by more than half, reversing a trend that began in the fourth quarter, when the business had its stock market debut and saw its value surge.
Rivian had a Good Start
Rivian automotive's stock rose 29 percent in its initial public offering, giving the Amazon and Ford-backed electric vehicle start-up a market worth of $86 billion after one of the year's largest IPOs. Rivian's stock began at $106.75 per share, up more than 50% from its initial price of $78 per share, before reducing some of those gains later.
Rivian had an implied valuation of $91 billion at its starting price. Rivian's market capitalization surpassed Ford's ($77 billion) and equaled GM's ($86 billion). It's still a fraction of the value of Tesla, the electric vehicle pioneer with a market cap of more than $1 trillion.
Rivian trades on the Nasdaq under the ticker "RIVN," and drew a lot of attention from investors hoping to cash in on the fast-growing EV sector. However, the company stated at the time that it was still developing a business strategy and that sales for the third quarter would be little more than $1 million.
Amazon and Ford's Investment
Amazon's 20 percent investment was worth almost $17 billion at the time, while Ford's 12 percent stake was worth more than $10 billion. In September 2021, Amazon announced that its stock investments, including Rivian, totaled $3.8 billion. Its Rivian stake is now worth nearly five times as much as it was two months ago.
While Ford executives have described their Rivian partnership as a strategic investment, the company's Lincoln division had previously planned to collaborate with Rivian on electric vehicle development. During the pandemic, their plans were shelved.
Amazon, which is transitioning its fleet to renewable-energy delivery vans, announced in 2019 that it was purchasing thousands of vehicles from Rivian. Amazon held exclusive rights to Rivian's battery-electric delivery cars for a minimum of four years, according to filings from last year, with the right of first refusal beyond that.
While Amazon has high hopes for Rivian, having signed a deal to produce 100,000 delivery trucks by 2030, the current market conditions are difficult. Rivian announced last month that it intends to deliver only 25,000 electric trucks and SUVs this year, less than half of the figure forecasted to investors during its IPO roadshow last year.
Tesla's Rival Electric Pickup Truck
Rivian, like most manufacturers, is dealing with supply chain issues and internal production bottlenecks. Rivian, on the other hand, was valued at $86 billion after its IPO, making it particularly vulnerable to a significant drop.
The Nasdaq Composite fell 9.1% in the first quarter, its lowest level since the Covid-19 epidemic began in the first quarter of 2020. In an era of rising inflation and interest rates, the riskiest bets took the biggest losses as investors shifted to safer assets.
Rivian's downward trend has continued into the second quarter, with the stock dropping another 36%. It's already down more than 80% from its November high. Ford lost $5.4 billion on its 12 percent investment in Rivian on Wednesday. Amazon owns around 18 percent of the company and has invested more than $1.3 billion in it.
The Longstanding Feud
This will undoubtedly irritate Jeff Bezos, who has had a long-running rivalry with Tesla CEO Elon Musk. To compete with Musk, Bezos is investing in electric automobiles and developing his own space program.
Jeff Bezos, the billionaire co-founder of Amazon, has spoken in on Elon Musk's $44 billion purchase of Twitter. Late Monday, Bezos tweeted that after the acquisition is completed, China may gain power over Twitter.
Bezos was then quick to respond to his own question saying “My own answer to this question is probably not. The more likely outcome in this regard is complexity in China for Tesla, rather than censorship at Twitter. But we’ll see. Musk is extremely good at navigating this kind of complexity.” Regardless of the qualification, Bezos' remarks are the latest in a long-running spat between the two billionaires.
Billionaires owning media companies, on the other hand, is not a new phenomenon. The Washington Post is owned by Bezos, and Salesforce CEO Marc Benioff purchased Time Magazine in 2018.