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Amazon takes $7.6 billion loss on Rivian stake from Q1 inventory plunge

RJ Scaringe, Rivian’s 35-year-old CEO, introduces his firm’s R1T all-electric pickup and all-electric R1S SUV at Los Angeles Auto Present in Los Angeles, California, November 27, 2018.

Mike Blake | Reuters

Amazon invested in electrical car maker Rivian in 2019 as a part of a plan to go inexperienced. Throughout the first quarter, it noticed nothing however pink.

In its earnings report on Thursday, Amazon took a $7.6 billion loss on its stake in Rivian. Shares of the EV producer plummeted by greater than 50% within the first three months of 2022, reversing course from the fourth quarter, when the corporate held its inventory market debut and noticed its worth skyrocket.

Whereas Amazon has large ambitions for Rivian, signing an settlement for the manufacturing of 100,000 supply autos by 2030, present market situations are tough. Rivian mentioned final month that the corporate expects to provide simply 25,000 electrical vans and SUVs this 12 months, half of the quantity forecast to traders final 12 months as a part of its IPO roadshow.

Like most producers, Rivian is battling by provide chain constraints and inside manufacturing snags. However Rivian was valued at $86 billion after its IPO pop, making the inventory notably weak to a serious pullback.

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Rivian’s drop in 2022

CNBC

The Nasdaq Composite dropped 9.1% within the first quarter, its worst interval for the reason that first quarter of 2020, when the Covid-19 pandemic was starting. The riskiest bets took the most important hits as traders rotated into property thought of safer in a interval of rising inflation and rates of interest.

Rivian’s drop has continued into the second quarter, with the inventory plummeting one other 36%. It is now greater than 80% off its excessive from November.

On Wednesday, Ford took a $5.4 billion loss on its 12% stake in Rivian. Amazon has a roughly 18% stake, in response to FactSet, investing a complete of greater than $1.3 billion into the corporate.

Learn extra about electrical autos from CNBC Professional

Amazon’s markdown is especially massive, however it’s not the one tech firm that is taking a beating on its fairness investments.

Earlier this week, Alphabet recorded a $1.07 billion loss on its investments “given market volatility.” Alphabet’s funding arms have backed firms together with UiPath, Freshworks, Lyft and Duolingo, which have all gotten caught up out there swoon.

Microsoft mentioned this week that its first-quarter revenue took a $174 million hit partially resulting from “mark-to-market losses on our fairness portfolio.” And final week Snap mentioned it had a $92 million unrealized loss “on funding that turned public in H2 2021.”

WATCH: Rivian’s CEO assured the corporate can produce 25,000 autos this 12 months

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