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Applied Optoelectronics and Amazon have entered into a transaction agreement that will vest up to 7.945 million shares upon Amazon or its affiliates making discretionary purchases of up to $4 billion from the company.
Shares of Applied Optoelectronics Inc. (AAOI) skyrocketed over 47% during Thursday’s after-hours trade as the company announced the issue of a warrant to Amazon.com Inc. (AMZN) to purchase up to 7.945 million shares.
In a filing with the U.S. Securities and Exchange Commission (SEC), Applied Optoelectronics announced that it has entered into a transaction agreement with Amazon.
The agreement ties the vesting of shares to a certain value of purchases Amazon should make from the company.
In its filing, Applied Optoelectronics revealed that 1.32 million shares have vested on the date of issuance, and the remaining will vest over a period of 10 years, based on discretionary purchases made by Amazon or its affiliates, up to an aggregate of $4 billion.
Subject to Amazon’s purchases from the company achieving this milestone, the company has the option to exercise the warrant on or before Mar. 13, 2035, at an exercise price of $23.6954 per share.
Applied Optoelectronics’ stock closed Thursday at $15.87.
Last week, analysts at B Riley upgraded the company to ‘Neutral’ from ‘Sell’ with a price target of $13.
FinChat data shows the average price target for the Applied Optoelectronics stock is $33.50, implying a 111% upside from current levels.
Of the five brokerage recommendations, two have ‘Buy’ and ‘Outperform’ ratings, and one recommends investors to ‘Hold’ the stock.
Retail sentiment on Stocktwits around the Applied Optoelectronics stock soared, entering the ‘extremely bullish’ (87/100) territory from ‘bearish’ a day ago.
Message volumes saw a massive spike, too, hovering at ‘extremely high’ levels at the time of writing.
Applied Optoelectronics stock has lost nearly 57% of its value year-to-date (YTD), but its one-year performance is relatively better, with a gain of nearly 14%.
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