"Amazon will be purchasing the equipment - no financing, cash up front. This deal, I think, demonstrates that the company, quite honestly, has been able to overcome what we believe has been two overhangs to our stock."
Plug Power Inc. (NASDAQ:PLUG) (“Plug”), the energy solutions provider, took off this week from $1.28 to $2.25. On April 3, 2017, we published an article, when the share price was as of $1.5. You can read it here.
The readers who bought shares at that time have made 50% return in just a few days. In this piece, we will give you more information about it. But, first of all, take a look at the fantastic jump:
What happened?
According to what the company said on Wednesday, Amazon.com Inc (NASDAQ:AMZN) had acquired the right to purchase 23% of Plug. In addition, the company reported that according to an agreement signed, the online retailer will utilize Plug Power fuel cells and hydrogen technology in its fulfillment of network.
The CEO of Plug Power celebrated the news using the following words:
This agreement is a tremendous opportunity for Plug Power to further innovate and grow while helping to support the work Amazon does to pick, pack and ship customer orders, our hydrogen fuel cell technology, comprehensive service network, and commitment to providing cost-savings for customers has enabled Plug Power to become a trusted partner to many in the industry and we are excited to begin working with Amazon. “Source
Plug Power has given Amazon some warrants to acquire shares of Plug, similar to those that we noted in our previous article. The terms of the deal include 55,286,696 of Plug Power’s common shares at $1.1893 per share, which is the exercise price. In order to vest the warrants, Amazon will have to pay a total of $600 million to Plug.
Something was going on and we noted it
In our previous article, we noted for our readers that it was not normal that the company missed the EPS expectations, but the share price rose. We remarked that this was a bullish sign:
“Turning to what stock analysts expected, the EPS released was -$0.11, which misses by -$0.05 what the market expected. The share price did not fall due to this number, which we see as a bullish sign. The share price of PLUG climbed on March, 2017, right after the company released its Q4 2016 numbers. Although the company did not obtain better earnings per share than what analysts expected, investors still bid the company up. This fact may be seen by some market analysts as a bullish sign”. Source
Did some market participants know before the market that Amazon was negotiating a deal with the company? We cannot be sure about it. The most important thing that we need to learn here is that the investors need to check every single detail in order to understand what was going on with the company. In this case, shares started to rise even before the news was out.
What now?
We encourage you to read carefully the news about this company, as in the same press release it was commented that Amazon and Plug will begin working together on “technology collaboration, exploring the expansion of applications for Plug Power’s line of ProGen fuel cell engines”.
Conclusion
The fact that market participants remained bullish on this name even when the company was not delivering good numbers, which made us write a piece about his company. We were right; the company delivered very good news after a few days. If you have invested when we published it, you must have made approximately a 50% return on investment. By joining forces with Amazon, there could be a lot more gains to be had. We believe this news is a real game changer for Plug Power and the start of a new bull run for the company’s shares.
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