Amazon’s stake in electric vehicle manufacturer Rivian Automotive was previously valued at $27 billion. That was in November, shortly after Rivian’s initial public offering, which occurred just before the Share price reached its peak.
However, with investors exiting risk in 2022 and selling off last year’s high-priced Initial public offerings, Amazon has taken paper losses on its Rivian stake totaling $11.5 billion for the first two quarters, a period in which Rivian lost three-quarters of its value.
Amazon reported a $3.9 billion loss on its Rivian holdings during the second quarter in its earnings report on Thursday. The news comes just a day after Ford, another major backer of Rivian, announced a $2.4 billion mark-to-market writedown.
Amazon’s investment is now valued at around $5 billion. The markdowns don’t impact the Amazon’s operations or cash position, and just reflect the massive gyrations in the market since late last year. The investment could become problematic if Rivian’s nascent business hits a snag or runs low on cash, hampering the company’s ability to manufacture delivery vehicles at the speed it promised Amazon.
Amazon said last week it’s beginning to roll out some of the electric delivery vans that it developed with Rivian.
Amazon announced last week that it is starting to roll out some of the electric delivery vans it developed with Rivian. Amazon expects to have thousands of Rivian vans in over 100 cities by the end of this year, the first step toward its goal of having 100,000 electric delivery vehicles on the road in the United States by 2030. Rivian, which will report quarterly results on August 11, has struggled to meet production targets for its R1T and R1S electric vehicles, which are aimed at the consumer market. In March, the company cut its 2022 production forecast in half, to 25,000 vehicles, including Amazon vans, as it deals with supply chain constraints and assembly line issues.
However, optimism has increased slightly in the third quarter. Since the end of June, the stock has increased by about 29 percent. It received a boost on Wednesday when Senate Majority Leader Chuck Schumer, D-NY, and Sen. Joe Manchin, D-WV, announced an agreement on what would be the most ambitious climate-change spending package in US history. The Inflation Reduction Act of 2022 includes $369 billion in provisions for clean energy. Rivian gained about 3%, joining a larger rally in solar and alternative energy stocks.