This renewable natural gas company is jumping after announcing a partnership with Amazon

Published Mon, Apr 19 202112:40 PM EDTUpdated Mon, Apr 19 20214:04 PM EDT

Shares of Clean Energy Fuels jumped as much as 26% on Monday after the renewable natural gas company announced a partnership with Amazon . The company said Monday that it will provide low and negative carbon renewable natural gas at 27 existing fuel stations and another 19 non-exclusive new or upgraded Clean Energy Fuels-owned stations across 15 states. The Newport Beach, California-based company said it expects to spend between $45 million and $60 million in 2021 building fueling stations to support the renewable natural gas contracted to Amazon. Renewable natural gas is made when methane is collected from organic waste sources including farms. As part of the agreement, Amazon will also take a stake in Clean Energy Fuels. The company issued a warrant enabling the tech giant to purchase up to an aggregate of 53.1 million shares, roughly 13.3 million of which have already vested, according to a filing with the Securities and Exchange Commission. Clean Energy Fuels is the largest provider of natural gas fuels for the transportation market in North America. The company makes compressed natural gas, which is a gasoline substitute, and liquified natural gas, which is a diesel substitute. Shares of Clean Energy Fuels, which has a market cap of $2.4 billion, are up 57% for 2021. But the stock is also 37% below its most recent high on Feb. 10. "We expect the name to see near-term support given the AMZN name carries weight," analysts at Cowen wrote after the partnership was announced. However, the firm maintained its market perform rating on the stock, saying the potential long-term implications of the partnership remain unknown. "Longer-term, we see the overall impact as modestly impactful to valuation as it is unclear if this agreement will support the main value driver for CLNE — expanding its upstream production footprint for sales into California," analysts led by Jason Gabelman said. Amazon has said it will be carbon-neutral by 2040, and the use of renewable natural gas will help reduce emissions for its long-haul trucks. "Running long-haul trucks with negative carbon footprint could play a major role in AMZN getting to carbon neutral by 2040," Credit Suisse said. "AMZN has not simply signed a supply agreement with CLNE. The nature of this transaction indicates AMZN was interested in becoming a partner and investor in CLNE." Credit Suisse has an outperform rating on the stock. The firm's $20 target is 80% above where the stock closed on Friday. Clean Energy Fuels also has partnerships with Chevron, Total and BP, among others. Shares finished the session 6.28% higher. - CNBC's Michael Bloom contributed reporting.

Clean Energy

Source: Clean Energy

Shares of Clean Energy Fuels jumped as much as 26% on Monday after the renewable natural gas company announced a partnership with Amazon.