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Is Blink Charging’s share price drive sustainable?

Blink Charging’s [BLNK] share price has been on an electrifying rise since last summer, soaring 3,628% – from just $1.73 on 1 June 2020 to a high of $64.50 on 27 January. The stock has seen some volatility since then and closed last week at $51.43, bringing the company’s market cap to $2.14bn. In the last three months alone, Blink Charging’s share price has leapt up from $9.70 – a gain of 430% (as of 12 February’s close).

Blink Charging’s share price outperformance comes despite the fact the electric vehicle (EV) charging operator is yet to report an annual profit in 11 years. This unimpressive revenue record has been combined with a warning of bankruptcy last year.

The company operates and provides EV charging equipment and services, including its proprietary cloud-based software, the Blink EV charging network that operates, maintains, and tracks its charging stations and data. It has thousands of EV chargers in multiple locations across the US.

 

Has Blink Charging’s share price been energised by the EV boom?

With little apparent substance behind the incredible rise in Blink Charging’s share price, a common theory is that it has benefited from the wider boom in the clean energy space, including EVs. There’s little doubt that green energy and the EV-related sector is a huge growth area. With 10 million EVs already on the road globally, BloombergNEF predicts another 4.4 million will be sold in 2021, up 60% on last year.

Looking further ahead, there could be 116 million EVs on the road by 2030, with EVs predicted to account for over half of new cars sold globally by 2040. “Blink Charging appears poised to benefit both from new equipment sales and recurring revenues from the stations it owns,” Rekha Khandelwal points out on The Motley Fool.

“Blink Charging appears poised to benefit both from new equipment sales and recurring revenues from the stations it owns” - Rekha Khandelwal

 

Clean energy stocks have also received a shot in the arm from pro-environment Joe Biden’s US election win. The US stimulus deal approved in December includes $35bn in funding for renewable technology and energy efficiency, with “$1.1bn for energy storage (electric batteries), and $2.4bn for modernising the electric grid (which could include funds for electric car charging networks)”, notes Rich Smith on The Motley Fool. Smith reckons this should be positive for Blink Charging’s share price: “The logical implication: $3.5bn in funding specifically tailored to companies using new forms of electric power to combat global warming.”

 

Could Blink Charging’s share price receive a sharp jolt?

In May last year, Blink Charging was forced to disclose “substantial doubt about [its] ability to continue as a going concern within a year”. Yet Blink Charging’s share price has soared, despite the company having to use debt and equity financing to fund its operations.

Blink Charging’s incredible share price gains are highlighted by its enterprise value-to-sales ratio (a metric to gauge whether a stock is overvalued) which “has blown out to 481”, according to Bloomberg’s Mark Chediak and Catherine Traywick. Compared with Tesla’s [TSLA], “[for] the darling of the EV world and a company with a very rich valuation itself — that number is just 26.”

Bloomberg cites Citron Research founder Andrew Left, who is blunt in his assessment, saying: “everything about it is wrong”, while Raymond James & Associates analyst Pavel Molchanov reckons, “this market is still too small and early-stage”, adding that “It will take time for economies of scale to materialise.”

Blink Charging faces a competitive market, with several small companies offering basic chargers, while at the higher end, ChargePoint and EVgo have deeper pockets. What’s more, both companies are set to be taken public via special-purpose acquisition company (SPAC) deals, giving them access to more funds. She also picks out Tesla as a potential rival, if it chooses to widen its charging services.

 

What’s the outlook for Blink Charging’s share price?

Roth Capital analyst Craig Irwin has just started covering the stock, and immediately placed a buy rating on Blink Charging’s share price, with a target of $67 – 30.27% above last week’s close. In a note, Irwin said that “Blink has deployed over 23,000 electric vehicle charging units through both consolidation and the pursuit of long-term strategic commercial partnerships with real-estate owners.”

Irwin is optimistic about the firm’s prospects and the EV space, arguing that he would buy the stock based on “leverage to accelerating electric vehicle adoption and continued growth of the company's charging network.”

“Blink has deployed over 23,000 electric vehicle charging units through both consolidation and the pursuit of long-term strategic commercial partnerships with real-estate owners” - Roth Capital analyst Craig Irwin

 

Looking at 12-month price forecasts on a consensus basis, Blink Charging has an average price target of $63.50, which represents a 23.47% increase from 12 February’s close at $51.43.

Blink Charging’s share price has been on a spectacular – and volatile ride – over recent months. The clean energy space clearly offers great potential and, while there may be room for the share price to climb, the company could face a challenging road ahead to justify its recent share price hike.

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