Both companies will play a role in building out an electric vehicle charging network, but which stock is best to own now?
Investors are looking at 2022 and positioning their portfolios to capture what is setting up to be a big year for electric vehicle (EV) stocks. One reason for that enthusiasm is the performance of EV charging stocks in 2021. And two such companies, ChargePoint Holdings (NYSE:CHPT) and Blink Charging (NASDAQ:BLNK) stand out among the rest.
If you invested in CHPT stock 12 months ago, you would be sitting on a gain of 64%. And if you invested in BLNK stock at that time, the gain would be even greater, to the tune of 240%. Both of those easily surpass the 30% gain in the S&P 500 Index or the 34% gain in the NASDAQ Index.
However, as investors in these stocks can attest, it’s been a bumpy ride. Both stocks are down significantly from their 52-week highs. One reason for that is the delay of the infrastructure bill that now appears to be moving through Congress.
In fact, both stocks got a nice lift on Nov. 8, when the bill passed through the House of Representatives. With that hurdle cleared, it’s time to look at which of these stocks presents the better buying opportunity.
Does network size make a difference?
If your answer to that question is yes, then ChargePoint is clearly the stock for you. The company has over 112,000 charging points spread throughout North America and Europe. Blink Charging has just over 28,000 chargers as of its last earnings report. And ChargePoint claims a 70% market share in the most common, level 2 segment.
This size difference is reflected in the respective company’s revenues. In the most recent quarter data is available, ChargePoint generated $56.12 million in revenue as opposed to $6.4 million for Blink Charging.
But is a larger network size enough? Maybe and maybe not.
Profit remains elusive
Neither of these companies is profitable and it’s unlikely that either will be any time soon. In and of itself that’s not too alarming. Although neither company is “new,” they are still in the early stages of scaling their operations to meet a global demand.
However, as noted above, this is a competitive business and its not entirely clear how the companies will be able to generate the revenue needed to turn a profit. It’s becoming clear that they won’t be able to do that simply by charging for electricity. That is, they can’t simply build their way to profitability, although ChargePoint has guided to becoming profitable by 2024.
What about recent results?
Blink Charging was the first to deliver third-quarter earnings and they posted a strong revenue number. A particularly impressive number was in Service Revenues which came in at $1.1 million. This was a 425% increase from the same quarter in 2020. But perhaps more importantly, it nearly doubled the $586,173 it posted in the same category in the prior quarter.
This revenue category speaks to how much the company’s chargers are being utilized as well as revenues associated with the Blink Mobility ride-sharing service program and revenues from the company’s Blue Corner acquisition.
And investors are taking note as BLNK stock jumped over 8% higher in early trading the day after the report came out. That means, for now, investors are shrugging off the bottom line number which showed a net loss of $15.3 million or 36 cents per share.
ChargePoint will get its opportunity to impress investors when it reports earnings in early December. However, in early trading, the Blink report is serving as a tailwind for CHPT stock as well which is up over 5%.
And the winner is …?
Given the size of its network, growing market share and, perhaps, a more likely path to profitability, ChargePoint looks like the better buy as a long-term investment. However, as this week proves, this will remain a volatile category for some time.
In the short term, BLNK stock is a more likely candidate for a short squeeze. In addition to having a short interest ratio of almost 35%, it requires nearly 9 days to cover the short position. By contrast CHPT stock has a short interest ratio of just over 10% and it requires about 2 days to cover a short position.
The opinion of analysts captured by MarketBeat suggest that BLNK stock has a downside of 11% from its current price while CHPT currently has a 21% upside.