What happened

Shares of Plug Power (NASDAQ:PLUG), an industry leader in fuel-cell solutions, soared last month as investors celebrated the company's announcement of a strategic agreement with Amazon (NASDAQ:AMZN).

So what

Following the successful deployment of Plug Power's fuel-cell solution at one of its warehouses in the fourth quarter of 2016, Amazon will now transition its forklifts to hydrogen power at several other distribution centers. According to Plug Power's press release, the recently signed deal with Amazon could be worth as much as $70 million in revenue for fiscal 2017 and $600 million overall. Considering Plug Power reported $86 million in revenue for fiscal year 2016, and the company currently has a market cap of about $494 million, it's clear why investors took so kindly to news of the deal.

Several arrows show an uptrend on a financial chart.

Image source: Getty Images.

Plug Power, as part of the agreement, also provided Amazon with a warrant to purchase up to 55,286,696 shares. Approximately 35 million shares will have an exercise price of $1.1893 per share; however, the exercise price of the remaining shares will be determined at a later date. According to the deal, the warrant is exercisable through April 4, 2027.

Now what

Those bullish on Plug Power may see the deal with Amazon as vindication -- proof that fuel-cell solutions are a valid alternative to traditional power sources. But people interpreting the deal as a harbinger of profitability must temper their enthusiasm and recall the company's deal with Wal-Mart. Forged in 2013, the relationship has led to significant top-line growth for Plug Power but unremarkable bottom-line growth.

PLUG Revenue (Annual) Chart

PLUG Revenue (Annual) data by YCharts.

Investors should be circumspect about the deal -- not just in terms of annual revenue, but how it affects shareholder value. For all of its financial woes, Plug Power has managed to operate without burdening itself with substantial debt. Unable to generate positive operational cash flow, though, the company has relied on raising equity to keep the lights on. The deal with Amazon further exemplifies this. Currently, Plug Power has about 233 million shares outstanding, according to Morningstar; however, the deal with Amazon could result in notable dilution: The share count could rise by as much as 24%.

As auspicious as Plug Power's deal with the leading online retailer may be, those who follow the company know that announcements of deals with big-name customers is not uncommon. What is uncommon, though, is bottom-line growth. Perhaps this deal will be different, but we'll have to wait several quarters before we have our answer.

Scott Levine has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.