Don’t kick a man when he’s down, Amazon (NASDAQ: AMZN). Rivian (NASDAQ: RIVN) shareholders got an extra slap in the face yesterday from the tech giant, even amid a broader market sell-off.
The news attributing to the decline is in relation to Amazon’s new partnership with Stellantis (NYSE: STLA), formerly known as the Chrysler brand.
What does the deal mean for Amazon?
Well, with the electrification of vehicles, we were bound to see Amazon poke its head in the door at some stage. The market Amazon’s after though isn’t the bulky manufacturing side of things. It wants to build software integrations for Stellantis to power the next generation of commercial vehicles through smart cockpits, a segment expected to have a market value of $36 billion by 2028.
The agreement is a bilateral one too. On the other side of the deal, Amazon has agreed to purchase commercial vehicles once Stellantis’ production begins in 2023. Amazon will be grabbing a fresh order from the automaker for last-mile delivery — and the news sent Rivian shares plummeting. Rivian shareholders can wipe that bead of sweat from the overreaction though, with Amazon saying “this doesn’t change anything about our investment, collaboration, or order size and timing.” referring to the EV pickup company.
So how will this benefit Amazon? It shows the company has no intention of slowing down and expanding in new markets despite its lackluster performance for shareholders in 2021. Amazon already has over 400 drivers worldwide which make 250-300 deliveries each working day. So, this deal, along with its 100,000 electric delivery van order from Rivian, will only fuel growth in its existing fleet of 40,000 semi-trucks and 30,000 vans.
Amazon hasn’t quite been as fortunate as its Big Tech friends in the last 12 months, having been the worst performer among all the FAANG stocks. But this, along with other moves the company is making, might just do the trick to getting the giant back on track.
Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.