Amazon Posts $2 Billion Quarterly Loss as Rivian Investment Tanks

Amazon announced a $2 billion loss for the second quarter this week. Although the company performed well against expectations for sales, the e-commerce giant also took a massive hit over its large investment in electric truck company Rivian.

The New York Post reports that Amazon recently beat Wall Street estimates for quarterly sales on Thursday, but posted a $2 billion second-quarter loss, compared with a $7.8 billion profit last year. Shares of the e-commerce giant rose by double-digit percentages in Friday morning trading.

Amazon reported $121.23 billion in net sales in the second quarter, compared with analysts’ expectations of $119.09 billion, according to Refinitiv. The company projected net sales between $125 billion and $130 billion for the third quarter. Analysts are expecting $126.42 billion.

The company also took a major hit on its investment in Rivian. CNBC reports that Amazon’s stake in the electric vehicle maker was worth around $27 billion in November, shortly after Rivian’s IPO. But with investors leaving behind risky investments in 2022 and selling off high-priced IPOs, Amazon has taken paper losses on its Rivian stake totaling $11.5 billion for the first two quarters.

During the same time, Rivian lost three-quarters of its value. Amazon stated in its second-quarter earnings report that it recorded a $3.9 billion loss on its Rivian holdings during the same period. The report comes just one day after Ford — one of Rivian’s biggest backers — took a $2.4 billion mark-to-market writedown on its investment.

Amazon’s investment in Rivian is now worth $5 billion. The markdowns don’t impact Amazon’s operations or cash position but reflect the major changes in the market since late last year. The investment could become a major issue if Rivian’s business faces issues or loses cash flow, preventing the company from manufacturing delivery vehicles at the speed that it has promised Amazon.

Last week, Amazon said that it’s beginning to roll out some of the electric delivery vans that it developed with Rivian. Amazon said that it expects to have thousands of Rviian vans in more than 100 cities by the end of the year. Amazon aims to have 100,000 electric delivery vehicles on the road in the U.S. by 2030.

Rivian will report its quarterly results on August 11. The company has struggled to meet the production goals of its R1T and R1S electric vehicles which are aimed at the consumer market. In March, Rivian cut its 2022 production forecast in half to just 25,000 vehicles, including Amazon vans, as it deals with supply chain constraints and issues with its assembly line.

Read more at CNBC here.