Blink Charging Stock: The EV Revolution Is Just Beginning (NASDAQ: BLNK)

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Not all revs rise in a straight line and the generational shift from gasoline and diesel vehicles to electric vehicles is no different. The inherent hesitation of the revolution has come on the back of the complete collapse of the cartel. guys from the wave of public electric vehicles of the pandemic era. The year-to-date performance of Lucid Group common stock (LCID), Fisher (FSR) and Arrival (AVL) have been torrid with market caps trading at a small fraction of their previous highs. Faced with such a material and dramatic collapse, it is easy to conclude that the entire transition was nothing more than hype. Perhaps one was based on an era of cheap money from low federal funds rates and government stimulus payments.

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But it would be a mistake to assess the collapse of confidence in electric vehicle companies and related charging companies as the end of the electric vehicle revolution. There has to be a separation of the common stock and the underlying growth of electric vehicle sales. The former had ventured deep into bubble territory at previous highs and was unsustainable even under the most optimistic scenarios for long-term EV adoption.

In fact, my inaugural coverage of Blink (NASDAQ: BLACK) described the valuation of the company as appalling. Longs had too quickly and unwisely bid his common stock in a true but too broad narrative that electric vehicles were the future and that critical enablers like Blink and other charging infrastructure companies and battery manufacturers faced parabolic growth. .

Demand for electric vehicles is skyrocketing

The global demand for electric vehicles is growing rapidly and Blink is making proposals to establish a global footprint. Ten years ago, in 2012, only 120,000 electric vehicles were sold worldwide. Last year this sales figure was realized on a weekly basis with 10% of all cars sold in 2021 being electric, 4 times the market share in 2019 with sales of gasoline and diesel vehicles stagnating in several developed countries. The shift to electric vehicles is still at a relatively early stage in the United States, with about 1% of all vehicles on the road currently electric. This number will change materially in the next decade. Globally, electric vehicles are forecast to grow to at least 26.8 million by 2030, up from 6.6 million in 2021.

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Blink last reported earnings for its fiscal second quarter 2022 saw the company post revenue of $11.5 million, a 163.5% increase from the prior year quarter and an improvement of $1.78 million. in the consensus estimates. This was driven by a 154% increase in service revenue to $2.2 million, as 5,631 charging stations were contracted, installed or sold during the quarter. This was a 73% increase compared to the prior year quarter.

Gross profit margin for the quarter of 22.6% increased sequentially by 321 basis points to help Blink post gross profit of $2.6 million. This was up from $1.1 million in the prior year quarter.

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However, the company’s level of confidence in its ability to scale is being directly challenged by rising net losses and operating cash burn. The former grew 67.4% year over year to $22.62 million, while the latter grew 58% to $19.6 million. This meant that cash and equivalents decreased to $85.14 million at the end of the quarter.

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While you’d expect Blink to be unprofitable just yet given expansion plans on the back of new partnerships from Guam to Jersey City, the rising rate of consumption in proportion to revenue growth provides reason to pause. . The company’s cash position is eroding and conditions for raising money are at their worst in years, with interest rates rising to new highs and stock valuations languishing at lows.

Electric vehicle charging companies could be a great way to gain exposure

Valuations at previous highs had been way ahead of the adoption curve with Lucid before revenue at one point reaching a higher rating than General Motors (GM) and Ford (F). So, rather than stalling the fundamental EV revolution, what we have seen to date is a fundamentally driven return on core investment. The hype, the euphoria and the optimistic drive fueled by the spirit animal have given way to finance.

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The secular shift to electric vehicles is now fully embedded in the post-pandemic economic ethos of most developed nations racing to combat anthropogenic climate change. And with IRA’s goal of creating the conditions for 50% of all new vehicles sold to be EV or plug-in hybrid electric models by 2030, the world ahead of Blink is huge.

Electric vehicles are past their esoteric phase and heading for mainstream adoption. So while only about 1% of all cars on US roads are electric, satellite dish sales in the coming years will see this number change rapidly to expand the total addressable market and revenue ramp of Blink. But with the company’s forward price-to-sales ratio at a costly 13.34x, the stock is still to be avoided.

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