Amazon, Plug Power Supply Agreement 'Just Another Tech Upgrade'

After Amazon.com, Inc. AMZN confirmed a supply agreement with and the rights to acquire a 23 percent stake in Plug Power Inc PLUG, Benchmark analyst Dan Kurnos told Benzinga the deal is “just another tech upgrade.”

But it wasn’t necessarily an expected one.

“[It] makes you wonder why Amazon couldn’t find a better tech to implement,” Kurnos said. “Regardless, spending hundreds of millions of dollars over several years is a drop in the bucket to enhance efficiency.”

Plug Power is expected to generate about $70 million in revenue from the agreement, while Amazon will procure technology to enhance the speed of warehouse activity and power industrial equipment.

Additionally, the contract requires Amazon to spend at least $600 million with the hydrogen fuel cell maker over the contract's lifetime in order to validate any stock purchases.

Collateral Damage

Although unlikely, the deal could impact present Plug Power customer Wal-Mart Stores Inc WMT.

“[It] would be more interesting if Amazon is interested in taking out PLUG so Walmart can’t use them, but I don’t see that as a viable strategy,” Kurnos said.

Plug Power was trading up 64.6 percent and Amazon 0.8 percent at time of publication.

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