Should Investors Pay Attention to These 2 Stocks With the Execution of Their EV Deal?
Amazon.com (AMZN) recently announced that it would start delivering its packages through the electric delivery vans it developed in partnership with Rivian Automotive (RIVN). With this move significantly progressing Amazon's...
Amazon.com (AMZN) recently announced that it would start delivering its packages through the electric delivery vans it developed in partnership with Rivian Automotive (RIVN). With this move significantly progressing Amazon's attempts to decarbonize its delivery fleet, should investors pay attention to the shares of these two companies? Let's discuss.
On July 21, 2022, Amazon.com, Inc. (AMZN) announced that it would start delivering its packages by custom electric delivery vehicles made by Rivian Automotive, Inc. (RIVN). AMZN had developed these electric delivery vans in partnership with RIVN in an attempt to decarbonize its delivery fleet. The electric vans will be used to make deliveries in a handful of cities, including Seattle, Baltimore, Chicago, and Phoenix.
AMZN expects to use more than a thousand such vans by the end of the year in more than a hundred cities. This marks progress toward its goal of having 100,000 electric delivery vehicles by 2030.
AMZN CEO Andy Jassy said, "Fighting the effects of climate change requires constant innovation and action, and Amazon is partnering with companies who share our passion for inventing new ways to minimize our impact on the environment." "Rivian has been an excellent partner in that mission, and we're excited to see our first custom electric delivery vehicles on the road," he added.
Although this deal is expected to lower AMZN's carbon footprint, it is unlikely to result in stock price gains for either of the companies amid the current macroeconomic challenges. Inflation has been at a multi-year high. Thus, higher costs are likely to affect the margins of the companies.
Given this backdrop, we think it could be wise to avoid these two stocks now.
Amazon.com, Inc. (AMZN)
Famous online retailer AMZN offers a variety of products and services through its platforms. The company's products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers.
In addition, it provides electronic devices such as Kindle, Fire tablet and Fire TV, Echo, and Ring. It also develops and produces media content that it publishes on its membership only Amazon Prime.
AMZN's total operating expenses increased 13.1% year-over-year to $112.77 billion for the first quarter ended March 31, 2022. The company's net loss came in at $3.84 billion, compared to a net income of $8.10 billion in the year-ago period. In addition, its loss per share came in at $7.56, compared to an EPS of $15.79 in the year-ago period.
Analysts expect AMZN's EPS for the quarter ended June 30, 2022, to decline 82.9% year-over-year to $0.13. Over the past year, the stock has lost 33.2% to close the last trading session at $121.
AMZN's weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops, manufactures, and sells electric vehicles and accessories. The company offers five-passenger pickup trucks and sports utility vehicles.
On July 27, 2022, RIVN confirmed that it would be undertaking job cuts due to inflation, higher interest rates, and higher commodity prices. RIVN CEO RJ Scaringe said, "We need to be able to continue to grow and scale without additional financing in this macro environment," "To achieve this, we have simplified our product roadmap and focused on where it is most impactful to deploy capital," he added.
For the fiscal first quarter ended March 31, 2022, RIVN's total operating expenses increased 162.6% year-over-year to $1.07 billion. The company's loss from operations widened 285.1% year-over-year to $1.57 billion. Also, its net loss widened 284.7% year-over-year to $1.59 billion.
For fiscal 2022, RIVN's EPS is expected to remain negative. The stock has lost 69.1% year-to-date to close the last trading session at $32.01.
RIVN's POWR Ratings reflect these bleak prospects. It has an overall F rating, equating to a Strong Sell.
It has an F grade for Value, Stability, and Quality and a D grade for Growth and Sentiment. Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #63 out of 64 stocks. To see the rating of RIVN for Momentum, click here.
AMZN shares were trading at $118.64 per share on Thursday morning, down $2.33 (-1.93%). Year-to-date, AMZN has declined -28.84%, versus a -15.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master's degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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