Nanalyze

Investing in Electric Vehicle Charging Stations

Whenever an exciting investment theme comes along, people will initially look for the “picks and shovels” investment opportunities. This is a reference to the fact that while everyone was trying to get rich mining gold, some clever person was making a mint selling them “picks and shovels” they could use to find gold – or not. One example of a picks-and-shovels play on genetics is Illumina. Why? Because pretty much everyone sequencing DNA at the moment is using an Illumina machine to do it.

Using that same train of thought when looking at electric vehicles, we might think that investing in lithium batteries would be a good idea. Perhaps we might look at raw materials like cobalt and lithium, that are being used in batteries and invest in those commodities. (Bear in mind that innovators may find substitutes if the price of these commodities goes too high.) Then of course you could invest in electric vehicle charging stations, which sounds like an interesting business model. Setup the equipment, charge a rate that gives you a nice profit, then go play golf while passive income rolls in. Or if you’re like 98% of people out there, tell everyone you have a great idea about how to get rich then don’t actually execute on it.

One picks-and-shovels play on electric vehicles may be to find companies that are building electrical vehicle charging stations and invest in those companies. Turns out that one of our MBAs was clever enough to spot this trend way back in August of 2015 when we published an article on “CarCharging: Investing in Electric Vehicle Charging“. This excerpt from that article should give you an idea of what this company looked like at the time:

On November 20, 2009, a Nevada company called New Image Concepts, Inc. changed its name to Car Charging Group and began trading on the OTC market under the ticker CCGI. In 2013, CarCharging (CCGI) acquired 4 companies; Car Charging, Inc., Beam Charging LLC (“Beam”), EV Pass LLC, and Blink Network LLC. CCGI now claims to be the largest owner, operator, and provider of electric vehicle (EV) charging services today.

Regular readers know what we think of over-the-counter (OTC) stocks. We put those in the same category of things we utterly detest, like ICOs or PR people who ask us to do free work for their paying clients. Sure, not all OTC stocks are scams, but do you really feel the need to “find the next Microsoft” by betting on companies that issue shares at the same velocity that the Federal Reserve prints money, all the while continuing to over-promise and under-deliver?

Some people do, and that’s why we cover the occasional OTC stock, much to the chagrin of the promoters lurking in the bushes who then proceed to threaten us. That’s why when we saw yesterday’s news from a company called Blink Charging Co. (BLNK), we had to take a second look. Shares were up +54% today, following a massive spike the day before:

First thing to notice here is that CarCharging (CCGI) has now changed their name to Blink Charging Co. (BLNK). If you recall, CCGI acquired Blink Charging as we mentioned before:

The most notable acquisition was that of Blink, a Company that was provided $230 million in funding to develop an electric vehicle charging network. Half of those funds came from the U.S. government and Blink claims to have initially installed 15,000 Blink commercial and residential charging stations.

“As of March 20, 2018, we have approximately 14,165 charging stations deployed” says the company, and with that many stations we would expect to see lots of revenues – maybe even some revenue growth. Instead, this is what we see:

Looks like the business of electric vehicle charging stations isn’t all that we thought it would be. The Blink network has 6,779 charging stations, so on average they are seeing $175 per station from “company-owned charging stations”. That sharp drop in revenue you see from 2016 to 2017 comes from a loss of product sales which means a competing charging solution might be displacing BLNK.

Then the big news hit, sending shares soaring more than +300% in just several days. This wasn’t a “material event” that merited the company filing any 8-K, and when you read the news you can see why. Here’s pretty much all that happened:

Blink Charging Co. has announced today that it has deployed charging stations at three Whole Foods Markets and are integrated into the development of more stores when they open.

Even at face value, the news doesn’t seem to consist of much. A company with over 14,000 charging stations deployed a few at three Whole Foods locations. That’s probably six stations total. We know that because it seems like lots of Whole Foods locations already offer electric vehicle charging stations (usually two). In fact, another startup called EVgo announced pretty much the same thing several years ago:

Another startup called Volta also announced that they’re working with Whole Foods – back in June of 2015.  Then there were some celebrities complaining in August of last year about the chargers at Whole Foods not working – which in America is a newsworthy event apparently. The response by Whole Foods stating “getting replacement parts for the twin GE WattStation chargers is tough” gives us a few clues. It seems like Whole Foods is trying lots of electric vehicle charging stations from various vendors, and Blink Charging Co. has now been added to that list. It also tells us that GE charging stations must not be doing too hot if Whole Foods just bad mouths them like that in public.

Maybe this explains why Blink Charging said something a bit strange about how their chargers would be “integrated into the development of more stores when they open” instead of talking about the potential of Whole Foods as a future customer with the 479 stores in existence today. A cursory look at the “electric vehicle charging station map” shows us that quite a few Whole Foods locations already have charging units. These certainly aren’t charging stations from Blink Charging.

If we leave this “news” aside for a moment, Blink Charging isn’t doing all that well since we last looked at the company. While they did a great job of up-listing to Nasdaq, it cost a pretty penny and required a 50-1 reverse share split. The real problem is, they’re not generating the sorts of revenues they need to keep the doors open. That could help explain why they have $26 million in accounts payable that they owe. Now maybe they can issue shares to pay that debt off since they’re worth so much more. Of course that would lead to something we discussed before called “dilution“.

There are plenty of things not to like about Blink Charging Co., and the recent news didn’t do much except show how much momentum speculators can create. So, if you want to invest in electric vehicle charging stations, what options are there besides buying some shares of Tesla? In another article a few years back, we looked at 7 Electric Vehicle Charging Companies and speculated that ChargePoint would be the winner. They now claim to be the world leader with 47,800 locations. Guess we can add one more name to the list of electric vehicle charging station vendors that Whole Foods has already been working with – in the case of ChargePoint, since 2010.

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