Rivian stock has plunged since the end of the year.
Courtesy of Rivian
Amazon.com
‘s earnings beat was huge, but it wasn’t driven by shopping or its cloud business. It was mostly the result of gains from its holdings of Rivian Automotive stock.
Ford Motor (ticker: F) owns Rivian stock (RIVN) too. Like Amazon (AMZN), it reported better-than-expected fourth-quarter earnings Thursday evening. Ford stock, however, isn’t climbing like Amazon shares on Friday.
Amazon reported per-share fourth-quarter earnings of $27.75. Wall Street was looking for $3.77. Now that is an earnings beat.
Shares are jumping following the report. Amazon stock is up 12.8% in early Friday trading. The S&P 500 is up about 0.4%. The Nasdaq Composite has gained about 1.2%.
Amazon’s iquarter has a catch though. Net income hit $14.3 billion for the quarter, but that included a pretax gain of about $11.3 billion on Amazon’s holding of Rivian stock.
Amazon holds roughly 160 million shares of Rivian.
Excluding the Rivian gain, and adjusting for taxes, Amazon earnings were closer to $8 a share. Still, compared with expectations, the quarter still qualifies as a spectacular outperformance.
Ford (F) also owns Rivian shares, about 100 million. Gains on those holdings added about $8.2 billion to Ford’s operating profit in the fourth quarter. And Ford reported unadjusted per-share earnings of $3.03. Wall Street was looking for $1.11 a share.
Ford stock isn’t up in Friday trading though. Shares are down about 9.9%. Backing out all the special items, such as Rivian, Ford reported 26 cents a share compared with Wall Street’s adjusted estimate of 45 cents.
Ford’s earnings missed expectations, and investors aren’t impressed with the Rivian gain.
Looking ahead, Amazon and Ford have a problem with their Rivian holdings. Rivian shares were about $104 at the end of 2021. That’s the measurement date for calculating fourth-quarter gains. Now they are about $62 apiece. That means Amazon is sitting on a pretax loss of about $6.4 billion, or perhaps $10 in per-share earnings, for the first quarter. Ford is sitting on a pretax loss of about $4 billion or perhaps $1 in per-share earnings.
Of course, the quarter isn’t over yet. Rivian shares will move up or down in the coming weeks. What’s more, investors can mark both companies’ Rivian stakes to market every day. Rivian is publicly traded. Gains and losses are transparent and shouldn’t really surprise anyone.
The value of Amazon’s Rivian stake is about $10 billion or 0.7% of the market capitalization of the online retailing and cloud giant. Ford’s Rivian stake is worth about $6 billion or 7% of the auto maker’s market cap.
Write to Al Root at [email protected]
