Hydrogen and fuel cell tech company Plug Power (PLUG 2.03, +0.73) trades about 56.2% higher today, at one point in the premarket session reaching as high as 148.5%, following this morning’s announcement that the company and retail giant Amazon (AMZN) have signed a multi-site agreement in addition to AMZN acquiring the right to buy a stake in PLUG.
PLUG has granted AMZN warrants to acquire up to 55,286,696 of PLUG common shares at $1.1893 per share, which is based on the volume weighted average closing price of PLUG’s common shares for the thirty trading days ending April 4, 2017.
Vesting of said warrants is tied to payments totaling $600 million in the aggregate made by AMZN, directly or indirectly, in connection with the purchase of goods and services from PLUG. An adjustment to the Exercise Price will occur after the first 34,917,912 warrants have vested, and will be based on the volume weighted average closing price, at the time that such warrants vest.
As for the technology agreement, AMZN signed on to use PLUG’s fuel cells and hydrogen technology in its fulfillment network, entitling PLUG to revenues of around $70 million in 2017. Additionally, AMZN and PLUG will begin working together on technology collaboration, exploring the expansion of applications for PLUG’s line of ProGen fuel cell engines.
More specifically, at select fulfillment center locations, AMZN will now power its industrial equipment such as forklifts with PLUG’s GenKey technology to enable faster charging times, reduced costs, and support efficiency across AMZN’s fulfillment operations. PLUG management noted AMZN will be purchasing said equipment with no financing and upfront cash.
In all, the visibility that PLUG’s offerings are getting from being on board at AMZN cannot be overlooked. Proving itself to arguably the largest retailer in North America gives credence to PLUG’s offerings and revenue stream. In light of today’s deal, PLUG management stated that it will likely update guidance to account for the deal in the Q1 conference call which should occur sometime in the first two weeks of May, but no official date has been set. It’s worth noting that PLUG already has an equipment agreement with a number of blue-chip firms across the world, including Walmart (WMT, Nike (NKE) and Home Depot (HD). The company’s existing guidance for unit shipments in 2017 stands at 5,600 GenDrive, including 1,800 under Power Purchase Agreements.