Amazon reported earnings late last week and posted an actual net loss — $3.8 billion, their first quarterly loss since 2015. My first reaction was the same as probably everyone else's: wait, Amazon lost money? The company that delivers a phone charger to your door in six hours lost money?
Except it didn't, not really. Not from selling stuff, anyway. Retail is still retail: thin margins, rising fuel and labor costs, all the stuff everyone's been complaining about since gas prices went nuts. The actual hole in the balance sheet came from somewhere almost nobody outside of finance Twitter was talking about: Rivian.
Amazon has a big pre-IPO stake in Rivian, the electric truck company, from back when it looked like the smart, obvious bet: climate-friendly delivery vans, an EV maker with real manufacturing chops, all that. Rivian went public last November at a valuation that was, frankly, unhinged for a company that had barely started shipping trucks. Since then the stock has been sliding pretty much nonstop. Amazon has to mark that stake to market every quarter now under the accounting rules, and this quarter that mark-to-market loss was something like $7.6 billion pretax. That single line item is bigger than the entire reported net loss. Take Rivian out of the picture and Amazon's core business was still profitable.
I find this kind of funny, honestly. A trillion-dollar logistics and cloud computing empire's headline number for the quarter got dragged into negative territory by the stock price of a truck startup that hasn't even hit full production yet. It's not really an Amazon story so much as a "what happens when a giant company parks a chunk of its balance sheet in a single volatile stock" story. Ask anyone who held onto too much of one thing in 2008 how that goes eventually.
The stock dropped hard on the news too, something like 14% the next trading day, which for a company Amazon's size is a genuinely enormous amount of market cap evaporating over a Friday. Analysts weren't only spooked by the Rivian writedown, to be fair. Amazon also gave weaker guidance for the next quarter and admitted they'd overbuilt warehouse capacity during the pandemic boom and are now sitting on more space and staff than they currently need. That part's the real story if you ask me, more than the Rivian noise. They hired like crazy in 2020 and 2021 assuming everyone would keep ordering nine packages a week forever, and now growth is normalizing back toward pre-pandemic trend lines and they've got extra everything.
Meanwhile AWS is quietly doing what AWS always does, which is print money and keep the whole company afloat. Operating income out of the cloud division was up strong even while North America retail posted an operating loss. This isn't new information if you've followed Amazon's earnings for more than one cycle, but it's still wild to me that the bookstore-turned-everything-store makes the bulk of its actual profit from renting out server capacity to other companies. I don't think that fact has ever stopped being a little absurd.
I'll admit I've got a personal chip on my shoulder about Amazon lately too, unrelated to any of this. My Prime renewal hit a couple months back at the new $139 price, up from $119, and I sat there for a solid ten minutes trying to convince myself I still needed two-day shipping on light bulbs and cat litter badly enough to justify the jump. I do not use most of what's technically bundled into that subscription: I've opened Prime Video maybe four times this year, and two of those were to see if a show was even on there before giving up and finding it somewhere else. So watching them post a multi-billion dollar loss the same season they raised my membership fee is, let's say, an interesting bit of timing, even though I know intellectually those two things have nothing to do with each other.
Apple had earnings the same week and did the opposite thing (beat expectations comfortably) but warned that the Shanghai lockdowns could cost them somewhere between four and eight billion dollars in the next quarter from supply chain disruption. Different company, same underlying theme going around right now: the last two years built up a lot of momentum that nobody quite planned for correctly, and everyone's spending this spring finding out where the assumptions broke.