EVgo vs. Blink Charging: Which Electric Vehicle Infrastructure Stock is a Better Choice?
Electric vehicle (EV) charging infrastructure companies such as EVgo (EVGO) and Blink Charging (BLNK) remain unprofitable but are forecast to grow sales at an exponential rate going forward. Which stock...
Electric vehicle (EV) charging infrastructure companies such as EVgo (EVGO) and Blink Charging (BLNK) remain unprofitable but are forecast to grow sales at an exponential rate going forward. Which stock between the two should be part of your portfolio today?.
If you’re bullish on the electric vehicle (EV) industry, then you should consider investing in ancillary EV companies. For example, one of the key factors that will drive EV adoption is the expansion of charging infrastructure.
According to a report from Research and Markets, the global electric vehicle charging infrastructure market is forecast to increase from $7.4 billion in 2020 to $36.72 billion in 2026, indicating an annual growth rate of 31.22% in this period.
A rapidly expanding addressable market is always a positive development for growth investors making stocks such as EVgo (EVGO) and Blink Charging (BLNK) market-beating bets for 2021 and beyond. Let’s see which EV charging company should be part of your portfolio today.
EVgo stock is down 65% from all-time highs
EVgo, valued at a market cap of $2.05 billion,owns and operates a direct current fast-charging network for battery electric vehicles in the U.S. As of May 2021, it operated 800 DCFC locations across 34 states in the U.S. serving 250,000 private and commercial EV drivers.
EVgo has gained traction in this high-growth vertical on the back of partnerships with original equipment manufacturers, rideshare providers, site host partners, and other e-mobility stakeholders. EVgo has also collaborated with General Motors (GM) where it will be the primary charging provider for the automobile giant.
In the next five years, EVgo expects to add 2,700 fast chargers to its network which will be a key driver of top-line growth. In fact, EVgo estimates sales to rise from $20 million in 2021 to $1.28 billion in 2027. Its adjusted EBITDA is also forecast to swing from a loss of $58 million to a profit of $507 million over the next six years.
EVgo stock is down 65% from record highs due to sector-wide volatility as well as the company’s decision to raise additional capital one month after it went public. In the second quarter of 2021, EVgo reported sales of $4.8 million which were 62% higher compared to its year-ago period.
Blink Charging sales almost tripled in Q2
A pure-play EV charging company, Blink Charging owns, operates, and manufactures charging equipment that is used by residential and commercial customers. Blink Charging has deployed over 23,000 charging stations all over the world and has a 10% market share in the U.S.
Its charging stations generate sales via a revenue-sharing model where Blink monetizes energy sales to recover installation costs resulting in higher charging prices compared to peers.
In the second quarter of 2021, Blink’s sales rose by 177% year over year to $4.4 million and the company reported a net loss of $13.5 million or $0.32 per share. It sold, contracted, or installed 3,264 charging stations, compared to just 380 in the year-ago figure period.
While the two companies continue to grow top-line rapidly, they are part of a capital-intensive vertical and will remain unprofitable over the next few years. This means, both EVgo and Blink Charging will need to raise equity several times going forward, which could mean a dilution in shareholder value.
At the time of writing, EVGO stock is valued at a forward price to 2022 sales multiple of 36.6x while the ratio for Blink Charging is also steep at 39x. Between the two companies, I believe EVgo seems a better stock right now, given its trading at a discount of over 75%, according to Wall Street price target estimates. Comparatively, Blink Charging is trading at a discount of 29% compared to consensus estimates.
EVGO shares . Year-to-date, EVGO has declined -28.57%, versus a 18.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.
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