Renewed euphoria for clean energy and battery electric vehicle suppliers resurfaced in the last week. Blink Charging (NASDAQ:BLNK) rose by 33.4% in that time and is now up 2,800% from its yearly lows. How is the momentum in BLNK stock trading so overwhelming that markets may ignore its paltry $0.91 million in quarterly revenue?
In Q3, Blink posted a 12-cent EPS loss and revenue growth of 18.4%. The $0.91 million revenue is not meaningful at this time.
Markets are pinning Blink’s growth prospects to its utilization rates. The EV industry, plug, and hybrid EV industry are poised to grow. Investors are betting that the incoming Administration, through Biden’s win, will increase subsidies and spending to the clean energy initiative. To pay for the support, it will tax oil and gas firms and impose strict environmental policies.
Under that scenario, utilization rates for EV charging stations will increase. Investors do not know yet how Blink Charging’s margins will look as utilization increases. But as utilization increase from, say, 5% to 10%, the gross margins will increase at a faster pace.
Bottom Line
Blink’s rising stock price will give the company a chance to sell shares or debt to increase its cash on hand. In doing so, it may increase its infrastructure spending and grow at a rate markets expect it to.
