Weekly Stockwatch: Rivian Hurts Amazon & Ford, Twitter Earnings Post-Musk Acquisition, Apple Sales Warning & More

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Rivian Crushed Amazon & Ford Income

Rivian Automotive is one of the hottest electric vehicle (EV) startups, having beaten other automaker to the electric truck market with the impressive R1T. Rivian, which went public just last November, had secured early backing from Amazon and competitor Ford.

However, its stock has wiped around 50% of value during the first three months of the year, with the aforementioned firms announcing losses from their investment in Rivian, during this week's quarterly results.

Amazon disclosed its first quarterly Net Loss since 2015 in Q1, with $7.6 billion losses stemming from Rivian [1], while a day earlier, the Ford Motor Company had announced a mark-to-market loss of $5.4 billion from the investment in the EV startup. [2]

Ford's Net Loss on the first quarter was $3.1 billion, while Revenue slipped 5% year-over-year, to $34.5 billion. Despite the not so great Q1 results and Covid-19 and supply chain disruptions, the firm reaffirmed its 2022 guidance for $11.5- $12.5 billion in adjusted EBIT due to strong demand and pricing.

The highly anticipated electric variant of America's favorite truck, the F-150 Lightning, started rolling-off factory lines this week, strengthening Ford's push to electrification. [3]

Twitter Increased Users & Musk Buyout

The social media firm announced at the beginning of the week that it had agreed to be acquired by an entity wholly owned by Elon Musk, in an approximately $44 billion deal that would take it private, once/if competed. [4]

There has been some doubt as to the financing of the deal, but the announcement noted that Mr Musk, has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment.

As a series of filings with the SEC revealed [5], Mr Musk sold a sizable chunk of his Tesla shares this week, with him tweeting on Thursday "No further TSLA sales planned after today". [6]

On Thursday, Twitter announced its financial results for the first quarter of the year, which showed an increase of 15.9% year-over-year in average monetizable Daily Active Usage (mDAU), to 229.0 million. [7]

The firm posted Revenues of $1.20 billion, which was 16% higher compared to Q1 2021, but the figure was lower than the Q4 2021 revenue of $1.57 billion. Net income was $513 million, representing a strong net margin of 43% and diluted Earnings of $0.61/share.

Apple Sales Warning

Apple (AAPL) reported underwhelming results for Q2 FY2022 (period ended March 26), on Thursday after markets closed. Revenues grew 9% year-over-year, to $97.3 billion, but this was nowhere near the record $123.9 billion generated in previous quarter. iPhone sales were the largest contributor with $50.57 billion, a 5.5% year-over-year increase. [8]

The firm also announced that board of directors has also authorized an increase of $90 billion to the existing share repurchase program.

What caught our attention however, was the sales warning from Chief Financial Officer Luca Maestri, for the next quarter. During the earnings call, the CFO talked of "Supply constraints caused by COVID-related disruptions and industrywide silicon shortages", which could have an impact "in the range of $4 billion to $8 billion". [9]

AAPL.us is soft at the beginning of Friday's trading, following Thursday's results, trying to avoid a fifth consecutive losing week.

Positive Reaction to Meta's Earnings

Facebook's parent company, Meta Platforms, released its financial result for Q1 2022, after market close on Wednesday, which were not that good, but investors reacted positively. [10]

One of the high points was the increase in the number of active users for the core Facebook platform and the family of apps. Revenues had a sluggish growth of 7% year-over-year and Earnings/Share dropped to $2.72, but beat estimates.

The Realty Labs business, which is responsible for delivering the Metaverse, is still a financial hole, since it operated at a loss $2.960 during the first quarter of the current year.

Boeing Lost Money on Air Force One

The troubled US aircraft manufacturer announced on Wednesday a Net loss $1,242 billion for the first quarter of the year, smaller than the $4.164 incurred in Q4 2021. Boeing also disclosed that it had taken a 660 million hit from the new Air Force One program during the reported period. [11]

During the earnings call, CEO David L. Calhoun said that Air Force One negotiations posed "a very unique set of risks that Boeing probably shouldn't have taken". [12]

Boeing's Revenues declined to $13.991 billion, from $15,217 billion a year ago and $14.793 billion in Q4 2021, due to "lower defense volume and charges on fixed-price defense development programs".

The Chicago-based firm delivered 95 commercial airplanes, noting that it has increased production and deliveries of the 737 MAX, while the 777X is not expected to be introduced before 2025.

BA.us dropped to its lowest level since late 2020 on Wednesday, while today it tries to find support, after six consecutive days of losses.

Next Week (May 02-06)

The earnings season is in full deploy and this week, focus will shift to Airbnb and to ride-haling rivals Uber and Lyft.

German automakers will also be in the spotlight, as we expect results from Volkswagen and BMW, while European aircraft maker Airbus also reports this week.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 29 Apr 2022 https://s2.q4cdn.com/299287126/files/doc_financials/2022/q1/Q1-2022-Amazon-Earnings-Release.pdf

2

Retrieved 29 Apr 2022 https://s23.q4cdn.com/799033206/files/doc_financials/2022/q1/PRESS-RELEASE-Q1-2022.pdf

3

Retrieved 29 Apr 2022 https://twitter.com/jimfarley98/status/1519004630297944064

4

Retrieved 29 Apr 2022 https://www.prnewswire.com/news-releases/elon-musk-to-acquire-twitter-301532245.html

5

Retrieved 29 Apr 2022 https://ir.tesla.com/sec-filings

6

Retrieved 29 Apr 2022 https://twitter.com/elonmusk/status/1519850299757846530

7

Retrieved 29 Apr 2022 https://s22.q4cdn.com/826641620/files/doc_financials/2022/q1/Final-Q1%e2%80%9922-earnings-release.pdf

8

Retrieved 29 Apr 2022 https://www.apple.com/newsroom/2022/04/apple-reports-second-quarter-results/

9

Retrieved 29 Apr 2022 https://www.apple.com/investor/earnings-call/

10

Retrieved 29 Apr 2022 https://investor.fb.com/investor-news/press-release-details/2022/Meta-Reports-First-Quarter-2022-Results/default.aspx

11

Retrieved 29 Apr 2022 https://s2.q4cdn.com/661678649/files/doc_financials/2022/q1/1Q22-Press-Release.pdf

12

Retrieved 25 Sep 2022 https://s2.q4cdn.com/661678649/files/doc_financials/2022/q1/1Q22-Earnings-Call-Transcript.pdf

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