Amazon’s green drive clips venture capital coupons

The logo of Amazon is seen during the Cannes Lions International Festival of Creativity in Cannes, France, June 21, 2022. REUTERS/Eric Gaillard

NEW YORK, Aug 25 (Reuters Breakingviews) – A promise by Amazon.com (AMZN.O) to roll out a new technology in its warehouses is valuable. Just look at the $730 million pop in the market value of Plug Power (PLUG.O) on Thursday morning after it announced an agreement to supply green hydrogen to the internet retailer starting in 2025. Amazon is also a clever shopper.

Plug Power granted warrants to buy up to 16 million shares to Amazon as part of the deal, which fully vest when the buyer has spent $2.1 billion on its supplier’s products. Nine million of those are already well in the money, helped by the 5% jump in Plug Power’s share price. If hydrogen made with renewable power proves economical, Amazon could enjoy lower costs while buffing its environmental reputation. Plug Power, meanwhile, can scale production and potentially attract others.

A similar 2017 agreement shows that both can benefit. Plug Power’s stock is up 10-fold since then. Yet Plug Power’s revenue from Amazon equalled negative $310 million in 2020 read more , due to the way it accounts for the accompanying warrants. Besides, analysts expect Plug Power to burn over $1 billion of cash this year, according to Refinitiv. Amazon’s endorsement has not yet delivered a viable business. (By Robert Cyran)

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Editing by Peter Thal Larsen and Sharon Lam

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