The night the Fed raised rates, the biggest after-hours jump came from a backup power generator company. Amazon signed a long-term supply agreement with Generac to provide backup generator sets for its data centers. The first batch deliveries in 2027 and 2028 total $2.4 billion. Once the news broke, the stock surged more than 40% in after-hours trading.
What’s really interesting is how this deal was structured. Amazon didn’t negotiate a discount; instead, it took warrants. The exercise price was a little over $200, which was higher than the closing price before the news by a noticeable margin. The shares vest in batches according to the procurement payment schedule, with a total procurement cap of $8 billion tied to it. Buy more, get more shares—the supplier’s production expansion schedule is effectively linked to Amazon’s data center expansion. This kind of after-hours blowout is the most painful: any price you see during the daytime orders won’t get filled at all; if you chase it after the overnight gap-up open, how much of that “40% gain” is left is down to luck.
Delivery lead times for standby generator sets are already long. This batch is scheduled to be delivered through 2028. The real issue going forward will be whether they can deliver on time.
What’s really interesting is how this deal was structured. Amazon didn’t negotiate a discount; instead, it took warrants. The exercise price was a little over $200, which was higher than the closing price before the news by a noticeable margin. The shares vest in batches according to the procurement payment schedule, with a total procurement cap of $8 billion tied to it. Buy more, get more shares—the supplier’s production expansion schedule is effectively linked to Amazon’s data center expansion. This kind of after-hours blowout is the most painful: any price you see during the daytime orders won’t get filled at all; if you chase it after the overnight gap-up open, how much of that “40% gain” is left is down to luck.
Delivery lead times for standby generator sets are already long. This batch is scheduled to be delivered through 2028. The real issue going forward will be whether they can deliver on time.