Today, it’s risk-on in the stock market. For companies like Aurora Innovation (NASDAQ:AUR), that’s a very good thing. AUR stock has surged more than 25% on above-average volume, following a rather volatile couple of days of trading.
Interestingly, this move is one that many investors consider to be delayed. That’s because the main news driving this move took place yesterday, during trading hours.
E-commerce juggernaut Amazon (NASDAQ:AMZN) announced the company was spreading its bets in the next generation of transportation. Already a large investor in Rivian (NASDAQ:RIVN), Amazon added to its stake in the autonomous and electric vehicle sectors, disclosing it has taken a 5.2% stake in Aurora Innovation.
As I commented on in a recent piece, this is not necessarily an either-or move. Rather, there’s a strong argument that can be made that Amazon is diversifying its exposure to the sector. With Rivian, Amazon gains key electric vehicle manufacturing capabilities. With Aurora, Amazon gains exposure to high-growth autonomous vehicle technology. Both bets appear to be reasonably sized.
However, let’s take a look at this deal from Aurora’s perspective. Specifically, let’s why Aurora is spiking today, rather than yesterday.
Why Is AUR Stock Soaring Today?
There is a notable difference between today’s trading session and yesterday’s. That’s thanks to the little fact that Amazon reported its earnings after-hours on Thursday.
The company reported an absolutely blowout beat on earnings per share, taking Amazon stock up more than 15% in earlier trading on Friday. However, much of this gain had to do with the company’s interest in Rivian, which boosted its earnings.
This new investment in Aurora is one that investors seem to think could take Aurora’s valuation, and Amazon’s, higher over time. What’s good for Amazon appears to be good for the companies it invests in. For Aurora, having the backing of this giant is a big deal.
Does Amazon have the golden touch? Time will tell. However, investors certainly have more reasons to like this deal today than yesterday.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
