Blog Coverage Kornit Signs an Agreement with Amazon; Set to Supply Garment Printing Solutions

LONDON, UK / ACCESSWIRE / January 12, 2017 / Active Wall St. blog coverage looks at the headline from Kornit Digital Ltd. (NASDAQ: KRNT) and Amazon.com Inc. (NASDAQ: AMZN). The leading producer of DTG (Direct-to-Garment) printing systems, Kornit Digital announced on January 11, 2017, that it has been selected to deliver multiple on-demand textile production systems to Amazon.com accretive to the Company’s flagship, Merch by Amazon. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Breaking down the Agreement

Under terms of the agreement, Kornit has committed to supply Avalanche 1000 DTG printers, NeoPigment ink, and other consumables at agreed upon prices. The transaction will be executed through a warrant, where Amazon will acquire 2,932,176 ordinary shares of Kornit at a purchase price of $13.03 per share based upon the preceding 30 trading days volume weighted average closing prices of Kornit Digital’s common shares.

The Two Units

Kornit Digital is a global leader in the printed textile industry. The Company boasts of a portfolio of DTG systems which offer multiple performance options. These solutions from Kornit offer high throughput printing capabilities and are exclusively designed to deliver large-scale printing of small runs of a range of images and designs. The DTG systems are categorized into two groups:

1. Entry level systems which includes Breeze and Thunder systems;
2. High Throughput systems which includes Avalanche family of systems, Storm II, and Paradigm II.

Merch by Amazon is the flagship service from the ecommerce giant, which enables developers to maximize revenues by banking on the infrastructure and logistics from Amazon. This service enables designers to earn royalties for a unit sale with no additional costs.

Amazon’s No-Risk Expansion Strategy

Amazon has seemingly found a brand-new way to deliver value to both its customers and clients. Previously, it offered electronic books for sale on the platform. In a matter of time, Amazon has observed the potential in apparel segment and driving on the digital printing technology from Kornit, it has facilitated mass customized production of T-shirts.

Nevertheless, Amazon is not the first player in the printed t-shirt business. Teespring, one of the leading online apparels platforms, stated that approximately 20 people in the US using its custom-printing system are making more than $1 million per year from t-shirt sales. Reportedly, Teespring produced about 9 million t-shirts in 2015, establishing itself as the single largest shirt producer in the US.

On January 11, 2016, Amazon chose Kornit Avalanche 1000, the direct-to-garment system, to enable the production of customized printed t-shirts. Under terms of the agreement, Kornit would build and supply additional Avalanche 1000 units to handle the elevating production needs. The fastest printer from Kornit can churn out 250 shirts an hour and is immensely popular with online merchants, as it facilitates personalized designs for customers.

Stock Performance

At the close of trading session on January 11, 2017, Kornit Digital’s stock closed the trading session at $16.80, surging 20.43% from its previous closing price of $13.95. A total volume of 1.76 million shares have exchanged hands, which was higher than the 3-month average volume of 72.77 thousand shares. Kornit Digital’s stock price surged 67.66% in the last three months, 66.01% in the past six months, and 46.09% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have soared 32.81%. The stock currently has a market cap of $506.18 million.

Amazon’s stock price was slightly up 0.39% to end yesterday’s session at $799.02. A total volume of 2.98 million shares were exchanged during the session. The Company’s share price has gained 29.31% in the past twelve months and 6.55% on YTD basis. The stock currently has a market cap of $372.26 billion.

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