Hot Tip: Keep Expectations Low With This EV Charging Stock

Stock Market

Blink Charging (NASDAQ:BLNK) stock manages one of the largest U.S. EV charging networks, with over 66,478 stations, including 50,167 in the Blink Network.

However, there are red flags. The company is unprofitable, and burning through a significant amount of cash. In its latest quarterly report, Blink reported a $41.5 million net loss on $32.8 million revenue.

Despite strong revenue growth year-over-year, operating costs have surged disproportionately.

Furthermore, Blink Charging’s past financial practices and governance problems have drawn attention from regulators and short sellers.

In August, the company received an SEC subpoena covering various subjects, including executive departures, related-party transactions, and disclosure matters.

Regardless of the SEC’s findings, it’s advisable for investors to be very cautious with this speculative high-growth name, considering its already stretched valuation and limited upside potential (in my view). 

Here are a few reasons BLNK stock may be one to steer clear of right now.

BLNK Stock So Far in 2023

From a year-to-date perspective, BLNK stock has been on a very rough ride. This EV charging stock has lost nearly two-thirds of its value from the start of the year.

That’s notable, considering the upside moves many other speculative growth stocks have seen during this fiscal year.

Now, bulls do have some catalysts to highlight in terms of the company’s upside potential. Blink Charging is leveraging local clean energy policies in Latin America to promote its products.

The company has engaged in some intriguing collaborations and partnerships. And there’s plenty of political pressure around the world to push for green energy solutions, including the electrification of vehicle fleets.

The thing is, there’s also increasing competition, higher interest rates, and a host of macroeconomic factors which are hurting the company’s business model right now.

Until investors can see a clear path to profitability, this is a stock that may languish behind its peers, at least for now.

BLNK and Its Rivals

As mentioned, Blink Charging may continue to face strong competition, especially from the prominent electric vehicle manufacturer Tesla (NASDAQ:TSLA).

ChargePoint (NYSE:CHPT) is another notable competitor, albeit a larger company with a market capitalization of $1.79 billion compared to Blink’s $190 million.

Blink Charging, despite its size, faces significant competition from Tesla’s expansive Supercharger network, which is compatible with various automakers’ EVs.

This poses a risk for BLNK stock investors, considering Blink’s relatively small position in the fast-charging industry.

Blink Charging’s stock performance has been declining significantly both this year and over the past two years. The market is cautious, recognizing Blink’s challenges.

It’s not advisable to invest in BLNK stock with hopes of a sudden recovery, as it has yet to demonstrate effective competition against Tesla.

What Now

Considering investing in Blink Charging stock in 2023? My advice for investors is to avoid the temptation to buy into this beaten-down asset.

While BLNK stock may appear inexpensive, competition from a well-known electric vehicle manufacturer’s charging network poses a significant challenge to the company’s long-term viability.

While Blink Charging may be expanding and securing deals, caution is advised, even in the face of what appears to be good near-term news.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.