Electric vehicles are becoming more prolific every year. Electric car sales have been growing 40% year over year since 2018 and account for 2.6% of all car sales. Some investors love startup Tesla for pioneering the EV revolution, while others back traditional car companies like Honda, GM, or Kia that are producing more all-electric models every year.
Regardless of which electric car you’re backing, Blink Charging Co (BLNK) is focused on keeping them charged. That begs the question – is Blink Charging stock a buy?
We’ll answer that question today, along with a deep dive into who the company is, what it does, and how past investors have fared. This will help shine a light on the prospects of this business model succeeding moving forward.
What Does Blink Charging Do?
When Tesla [TSLA] initially laid out its plans for vehicles powered entirely by electricity with no need for burning fossil fuels, there was one key ingredient needed.
As you drive across the country (and even the world), you’ll find petroleum-based gasoline stations nearly everywhere. However, an electric vehicle limits your range around your home where it’s charged.
Tesla’s Superchargers were built out across the United States, and Blink saw an opportunity to compete without the need of manufacturing automobiles at all.
Instead, the Blink Network is an EV charging network that includes both equipment and services to businesses and other property owners and managers who want to install these chargers on their properties.
The ability to add reserved parking for EV charging can often be a boost to business, and there are only four companies controlling over 60% of the charging stations in the U.S. – Tesla, Blink, ChargePoint, and SemaConnect.
Is Blink Charging Stock a Buy?
Although Blink charging stations run noticeably slower than Tesla’s and cost a little more to the driver, there’s still plenty of room for this business to grow.
Notably, airlines, hotels, and event venues like stadiums all have long-term parking options that are perfectly suited for these chargers.
In addition, auto-repair shops, personal residences, and other places may see a potential benefit to partnering with Blink over Tesla and the competition. Is this enough to make it a buy?
From 2018 through 2020, Blink Charging stock hit 5-year lows well below $10 per share, stabilizing in the $2-3 range before doubling in value in early July 2020. This jump is leading many analysts to believe Blink may be heading for a buyout with the potential to generate big gains for holding investors.
Tesla [TSLA] had previously expressed interest in the company, although no details were ever ironed out. With the projected range of electric vehicles estimated to reach nearly 300 miles by 2030, this may be the next generation of fueling stations.
Of course, just because the industry is growing doesn’t mean Blink has to grow with it, which is why it holds a sell rating with most brokerages.
Risks of Investing in Blink Charging
Like any service business, Blink is ultimately bound by the size of the EV market. It owns a subsection of a niche market when gasoline still rules the roost.
This severely limits its potential customer base, and when electric becomes a large enough part of the automobile market, c-stores and other gas stations can simply install EV charging stations, as many are already starting to do.
This means the bottom line for Blink Charging is in securing as many business-to-business (B2B) contracts to get as many of its charging stations as possible installed across the country.
If another company (like Tesla) beats it to the punch, it’ll have successfully stifled Blink’s growth potential, leading to a possibly discounted buyout.
During the struggle, it’s possible the company could lose capital and run low on cash and assets, leaving investors holding the bag.
Because it spent so much time under $10, Blink could also end up delisted from NASDAQ and recategorized as a penny stock trading only on OTC markets if the stock market takes another downturn heading into the 2020 presidential election and expiration of coronavirus protections.
Will Blink Charging Competitors Beat It?
Although Blink is a big player in its market with 15,000+ charging stations, it’s not alone, and its projected shrinkage of around 5.3% may lead you to look at other similar investments. Tesla (TSLA) is continuing to grow, as CEO Elon Musk snags a $50 million SEC settlement and showcases high preorder sales for its Cybertruck.
The company operates over 16,000 Superchargers in 1,826 stations around the world, as of March 2020. Privately held ChargePoint owns and operates over 113,000 charging spots, although it’s only accessible to institutional investors.
In total, there were over 78,500 charging outlets in nearly 25,000 charging stations located across the United States as of March 2020. They’re largely located in California, and older, more affluent people are the most likely owners of electric vehicles, making them the target demographic for charging stations as well. The cost gap between electric and gasoline vehicles is quickly closing though.
Blink Charging Stock Forecast: The Bottom Line
Electric vehicles are the future, but that future seems far away for the average consumer. It’s mostly due to the cost of lithium batteries used to power everything, and those prices are going down as we speak.
This leads the way for a brighter future with less carbon waste from gas-guzzling vehicles like the Tesla Cybertruck and Nissan Leaf. Blink Charging is hoping to be the Chevron or ExxonMobil of electric charging, installing a broad network of stations for consumers to “refuel.”
The concept is great, but the so is the competition, and that leads to a volatile market for the foreseeable future. The coronavirus quarantine’s economic impacts will certainly hit this sector too.
For Blink Charging can survive the turmoil and keep revenue coming in a contactless environment, it needs to secure major B2B contracts, which isn’t easy in a post-Covid world. Invest with caution.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.