Generac lands $2.4 billion generator contract with Amazon, stock soars 40%
Article excerpt
Generac stock jumped about 40% in after-hours trading on Wednesday, after Amazon signed a long-term agreement to purchase $2.4 billion worth of backup generators for its data centers. Generac disclosed the agreement in a regulatory filing on September 16, which also revealed the issuance of a warrant to an Amazon subsidiary for up to 1,693,745 shares. The exercise price of $200.93 is approximately 15% above the closing price of $175.11 on that day: the position therefore only becomes lucrative if the stock continues to rise. Approximately 307,954 shares were acquired immediately. The balance will be acquired in tranches, as Amazon's payments for the generators accumulate, up to a ceiling of $8 billion in gross payments over the life of the contract. Generac can settle in cash or shares by September 16, 2033. The full position would represent approximately $340 million, or nearly 3% of Generac's capital, for a market capitalization of approximately $10.3 billion. The stock then soared. Neither group specified the breakdown of the $2.4 billion between the two years of delivery, nor the margins associated with the contract. Also read: Bitcoin mining faces a 50% hashrate deficit as AI captures capacity. Cantor Fitzgerald confirmed its "Overweight" recommendation and its price target of $333, calling the agreement the most significant development for the group's data center...
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Data center revenues exceeded $100 million over the three-month period, and the Wisconsin-based company is targeting nearly $450 million for the full fiscal year, on quarterly net sales of $1.17 billion.
