Rivian saves Amazon’s balance sheet – but difficulties are imminent

• Amazon balance sheet with a huge surprise
• Rivian boosts Amazon profits
• Rivian price influences Amazon’s balance sheet in Q1 as well

Amazon wowed investors with its recent quarterly results. As a result, Amazon shares rose 13.54 percent the day after the balance sheet was released to close at $3,152.79. The market capitalization of the online giant grew by a good 190 billion US dollars in one fell swoop – no US company had ever achieved such an increase in value in a single day.

Rivian as a profit driver

In the fourth quarter, Amazon posted earnings per share of $27.75, beating market expectations of $3,612 on average. However, this success is essentially based on the stake in the e-car manufacturer Rivian, of which Amazon owns 160 million shares.

Thanks to this participation, Amazon was able to book a considerable special proceeds in the Rivian IPO in November. For example, Amazon’s net income, which nearly doubled to $14.3 billion from the prior-year quarter, includes a pre-tax profit of $11.3 billion from its Rivian stake. Adjusted for the Rivian effect and taxes, Amazon only achieved earnings per share of around 8 US dollars, but the average analyst estimate was significantly exceeded – not least thanks to a highly profitable cloud business.

Successful Rivian IPO

The Tesla competitor Rivian set off a course firework in its billion-dollar IPO in November 2021. The papers of the electric car manufacturer started their first day of trading on the US tech exchange NASDAQ at a price of 106.75 US dollars. Measured against the issue price of 78 US dollars, this corresponded to a premium of almost 37 percent. At the close of trading, the share still cost 100.73 US dollars.

Although Rivian’s product range is still very manageable, many market observers still regard the group as a serious Tesla challenger in view of the trend towards electromobility. Because Rivian launched its first electric model in the competitive pick-up segment in September, winning a race with Tesla, among others. In addition, the company, which was founded in 2009, has received lucrative large orders for delivery vans from its major shareholder Amazon.

Possible problems foreseeable

However, the Rivian stake could cause major problems for Amazon as soon as it reports for the first quarter of 2022. Because while the Rivian paper was still around 104 US dollars at the turn of the year, the price has now collapsed to around 60 US dollars (as of February 4th, 2022). As a result, according to Barron’s, Amazon is sitting on a pre-tax loss of around $6.4 billion, or $10 per share, for the first quarter of 2022.

At least the market participants shouldn’t be surprised by this, after all Rivian is now listed on the stock exchange, which means that the price development is transparent and can be tracked by everyone. In addition, “Barron’s” information is only a snapshot and the first quarter is not over yet. The Rivian share price can finally move significantly again by the end of March – in one direction or the other.

Editorial office finanzen.net

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