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How Rivian Rescued Amazon Earnings—but Not Ford

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Courtesy of Rivian

Amazon.com ‘s huge earnings beat was mostly driven by gains from its holdings of Rivian Automotive stock.

Ford Motor owns Rivian stock too. Like Amazon , it reported better-than-expected fourth quarter earnings Thursday evening. Ford stock, however, isn’t climbing like Amazon shares in after-hours trading.

Amazon.com (ticker: AMZN) 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 after the beat. Amazon stock is up 15% in after-hours trading. Shares fell 7.8% in regular hours trading Thursday as investors sold Big Tech after Meta Platforms (FB) earnings report. Meta dropped 26.4%. The S&P 500 fell 2.4%. The Nasdaq Composite fell 3.7%.

Amazon’s quarter 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 (RIVN) 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 huge earnings beat.

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 after hours trading though. Shares are down about 4%. 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 missed and the stock is down. 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 $60 a piece. That means Amazon is sitting on a pretax loss of about $6.4 billion, or perhaps $10 in per-share earnings, for the fist 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 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 market cap of the auto maker.

Write to Al Root at allen.root@dowjones.com

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