Why CLNE should be in every portfolio
In late April, CLNE entered into an agreement with AMZN to provide their carbon negative RNG fuel to Amazon trucks nationwide. This deal called for CLNE to construct an additional 19 Clean Energy fueling stations in addition to the 27 stations CLNE had astutely built right next to Amazon’s warehouse as part of the long game to get out of the friend zone with them. In exchange for this consideration, AMZN will be buying a fleet of RNG capable vehicles and purchasing, at a minimum to complete the arrangement, over 200 million gallons of RNG as part of their goal to become carbon neutral by 2025 - and as the most green fuel in the world, RNG represents a big chunk of being able to fudge some carbon footprint in other areas by overcompensating in fuel. To make this deal attractive to Bezos, CLNE worked a deal to issue up to 53,000,000 shares of CLNE stock via warrants at a cost basis of $13.49, to be executed at various gates over the next 10 years. That represents about 27% of the company.
The first 13,000,000 shares are fully vested upon the execution of the agreement and an affirmative vote by the shareholders, many of which are you guys because you were so smart as to buy CLNE. That happened today. The remaining 40,000,000 are only able to be executed by Amazon if they buy fuel and a lot of it. Half a billion dollars of it by today's value, which most people estimate will be worth 1.5 billion over the next 10 years as prices rise. With a present market cap of only 2.23 billion dollars, this 1.5 billion represents almost the entire value of the company as it sits today. Amazon, of course, only signed this deal because they figure that $13.49 they'll pay per share is a bargain compared to what the company will be worth as they swap CLNE out.
Less discussed is the fact that $AMZN, under terms of the deal, will never be permitted to own more than 5% of the company at any given point. If they ever go over, they've got to give up some shares of the company. This is the most important part of that entire deal, and it's the part most people don't seem to understand or one they disregard as irrelevant. Basically, no more situations like CLNE is in with TOT right now where that company owned 20% of CLNE at one-penny per share, and has been destroying the stock price for almost 2 months as they de-leveraged with their 800 baggers. Obviously, AMZN is going to want more than the $13.49 a share they're paying, which means it's in their best interests to see to it that CLNE is worth as much as possible. Which very likely means buying more fuel than required as well as "gently nudging" their distribution partners to go RNG, as well. And by gently nudging, obviously I mean "waterboarding until they comply". You're already starting to see some of the results of this, with a deal being worked out between UPS and CLNE, completely of their own free will of course, to partner up for RNG contracts.
If AMZN's "win" in this deal is acquisition of diluted shares which they will not be able to actually keep, then in order for AMZN to "win", they have to be able to sell those shares for more than $13.49 as they keep at their 5% ownership ceiling. The floor on CLNE's price should not be 13.49 because that's what AMZN is paying, that's wrong, and everybody who's been saying that has had it backwards. The floor should be 13.49 because that's what AMZN's cost basis for compulsory SELLING is. And I guarantee you AMZN didn't agree to pay $13.49 a share on top of 3-something a gallon to break even or lose money.