. It’s the kind of low-cash diet plan that Amazon can easily offer, and one many struggling technology companies would covet., is recruiting Amazon to procure new customers through its Prime offering. In return, Grubhub will give Jeff Bezos’ firm a slab of warrants – notes exchangeable for shares at a negligible price. Amazon gets the equivalent of a 2% stake up-front, rising to 15% if certain milestones including customer retention and order frequency are hit.
It isn’t the first such arrangement of this sort for Amazon – the company had $3.4 billion of other companies’ warrants on its books at the end of March. Such deals don’t always work out, though. Taking stock options or warrants can expose the recipient to big swings in value. Amazon took a $7.6 billion loss on its investment in electric-vehicle maker Rivian Automotive
during the second quarter of 2022 – though Amazon is a customer of Rivian rather than a vendor. Still, helping Grubhub win customers will cost the $1.2 trillion online retailer next to nothing. It helps that Amazon’s involvement itself makes the warrants more valuable. Just Eat’s shares rose 16% on Wednesday.Paying cash to Amazon probably wouldn’t have been a great option for Grubhub.
But it isn’t the only tech firm that could benefit from a deal of this sort. Companies in the United States managed to raise