Blink Charging’s stock price has taken a beating over the past six months, shedding 63.3% of its value and falling to $0.73 per share. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy Blink Charging, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Even though the stock has become cheaper, we're swiping left on Blink Charging for now. Here are three reasons why you should be careful with BLNK and a stock we'd rather own.
Why Is Blink Charging Not Exciting?
One of the first EV charging companies to go public, Blink Charging (NASDAQ: BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.
1. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Blink Charging’s earnings losses deepened over the last five years as its EPS dropped 10.2% annually. We’ll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences.
2. Cash Burn Ignites Concerns
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Blink Charging’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 89.2%, meaning it lit $89.20 of cash on fire for every $100 in revenue.
3. Short Cash Runway Exposes Shareholders to Potential Dilution
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Blink Charging burned through $55.78 million of cash over the last year. With $41.77 million of cash on its balance sheet, the company has around 9 months of runway left (assuming its $7.43 million of debt isn’t due right away).
Unless the Blink Charging’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.
We remain cautious of Blink Charging until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.
Final Judgment
Blink Charging’s business quality ultimately falls short of our standards. After the recent drawdown, the stock trades at $0.73 per share (or 0.6× forward price-to-sales). The market typically values companies like Blink Charging based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy. We’d suggest looking at our favorite semiconductor picks and shovels play.
Stocks We Like More Than Blink Charging
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