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Blink Charging (NASDAQ:BLNK) develops and deploys charging solutions for electric-powered vehicles. If you want a rundown on the company’s business model and how it makes its revenues and profits, you can visit my first article which I’ve written for Seeking Alpha PRO following its IPO here.
The gist of it is – the company is one of the leaders in an industry which is experiencing exponential growth given its market sector. The electric-powered vehicle market has been experiencing strong growth in recent years and that’s not expected to stop, or even slow down, any time soon. From 2021 through 2030, market analysts expect the electric-powered vehicle industry to grow at a CAGR (compound annual growth rate) of 21.7%, which is significantly faster than the overall automobile industry, which is expected to grow at a 6.6% CAGR over the 2021 to 2027 time period.
Even today, the main hindrance to the overall growth and adaptation of all-electric vehicles is charging station infrastructure. If you live in a smaller suburb and have a fixed commute to work every day where you can find a charging station, your use of an all-electric vehicle is a no-brainer. But under most other circumstances, including driving vacations or further-away day trips, the use of an all-electric vehicle is impractical if you don’t have a way to charge your vehicle’s batteries every 250 to 350 miles. That’s what Blink Charging, as well as other companies, is aiming to do by deploying thousands of these stations all across the United States, Europe and the world.
Given this gap between EV adaptation and existing charging infrastructure, the electric vehicle charging station market is expected to grow at a slightly faster rate, according to analysts, at a 31.1% CAGR through the same 2030 time frame.
So it begs the question:
Why Blink Charging?
The main reason I ever took a pause on my bullish stance on Blink is due to increased competitive pressures. ChargePoint Holdings (CHPT), which is the industry’s current leader by revenues, is one of Blink’s main competitors, even though there certainly are more companies both public and private which are beginning to emerge as major players in the industry.
There are 2 main drivers to my bullish stance on Blink and why I expect them to dominate the infrastructure expansion effort, and they’re both familiar to investors – revenues and profits.
Revenues:
ChargePoint’s business model has some minor differences with Blink’s business model, but it has allowed them to grow revenues to a higher point by dominating certain markets. In the most recent quarter, the company reported $81.6 million in revenues, higher than Blink Charging’s $9.8 million and Volta’s (VLTA) $8.2 million, combined and multiplied.
Even so, Blink Charging grew its sales by over 350% in this most recent quarter relative to the same period last year while ChargePoint grew their revenues by just over 100% and Volta grew theirs by just shy of 80%. All of these figures are impressive, especially in a market which is expected to grow by just over 30% – but Blink Charging has still been able to dominate this growth, indicative to me of market share growth as they continue to deploy more charging stations across the United States and the world.
| 2019 | 2020 | 2021 | |
| Blink Charging | $2.8 million | $6.2 million | $20.9 million |
| +3.7% | +121% | +237% | |
| ChargePoint | $144 million | $146 million | $241 million |
| +57.1% | +1.39% | +65.1% | |
| Volta Inc. | $15.3 million | $19.5 million | $32.3 million |
| N/A | +27.5% | +65.6% |
(Source: Previously linked income statements)
Beyond the fact that Blink Charging has been able to grow revenues at a much faster rate, even when taking into account the fact that their lower revenue totals are easier to grow, future expectations also show their advantage:
| 2022 | 2023 | |
| Blink Charging | $55.3 million | $99.0 million |
| +165% | +79.0% | |
| ChargePoint | $467 million | $736 million |
| +93.8% | +57.6% | |
| Volta Inc. | $72.3 million | $154 million |
| +124% | +113% |
(Source: Seeking Alpha Earnings Projections – BLNK, CHPT, VLTA)
Although there’s an argument to be made that Volta is a solid choice given that the decline in revenue growth, which all companies are expected to show, is less than Blink’s – there’s a second factor which we must consider.
Profits:
All electric vehicle charging companies are expected to continue and report a loss in the coming few years as a) expenses related to infrastructure deployment remain high and b) cost of manufacturing their equipment is not yet at its most efficient point. However, it’s important to take a look at their gross margins to determine which companies will be able to lower costs for consumers once the aforementioned expenses decline and capture market share. This is where Volta and others differ, where only Blink Charging has been able to grow their gross margin relative to last year:
| Q2 2021 | Q2 2022 | |
| Blink Charging | 18.18% | 19.39% |
| ChargePoint | 22.72% | 14.83% |
| Volta Inc. | -4.26% | -15.48% |
(Source: Previously linked income statements)
As we can see, Volta is alone in the field when it comes to them still losing money on their actual sales, without taking into account any SG&A and other expenses. This is mostly because Volta relies on ad revenue from their media-powered charging stations while customers prefer the charging options of Blink or ChargePoint, among other public and private companies.
Competitive Pressures
Speaking of other companies, Tesla (TSLA) also poses a serious threat to Blink, and other charging station companies. This is because they have recently opened up or are planning on opening up, their charging networks to all electric-powered vehicles and not only their own Tesla vehicles. This doesn’t only add thousands of charging points around the globe, but also has the potential to significantly subsidize charging pricing due to Tesla’s other profitable business segments in an effort for them to consolidate the industry as billions of dollars pour into charging infrastructure deployment across the world.
Beyond the organic competitive pressures that Blink faces from the likes of ChargePoint and Tesla, there are several other smaller private and public companies which are fighting, and sometimes getting, grants from public programs aimed at expediting electric vehicle adaptation around the world in order to help combat climate change.
Price Action & Growth Potential
I believe there are several factors which go into driving the aforementioned revenue and gross profit growth for Blink. The first is the global adaptation of electric-powered vehicles as a means to combat climate change. The main hurdle to adapting to all-electric vehicles in charging infrastructure – that’s why recently, the Biden administration passed an infrastructure spending bill which includes billions of dollars to deploy charging stations across the country. This is happening all across the globe and Blink charging, I believe, will enjoy this spending boost across their operating platforms in the United States, the European Union and the United Kingdom and other potential addressable markets in the Asia-Pacific region and around the world.
The reason why I’m so optimistic about Blink charging from an investment point of view is that I believe that they’ll continue to grow revenues at a slightly faster rate than competitors, even as more competition emerges. Throughout 2020 and 2021, the market for electric vehicle charging stations, linked in the beginning of the article, stood at about $10 billion, with Blink holding a market capitalization of about $1 billion, representing a 10% share relative to its market capitalization. Given that the market is expected to grow to $140 billion by 2030, a 2% share relative to market capitalization will mean that Blink can be worth $2.8 billion.
$2.8 billion market capitalization, using 42.7M shares outstanding, comes to just above $65.00 per share, significantly higher than its current $16.00 per share. This reflects a near certain market-beating return through 2030, presenting a solid investment opportunity for relatively high risk tolerant investors given competitive pressures and industry volatility.
The company’s shares peaked at over $50.00 per share in the months following its IPO, and has since fallen back to around $16.00 per share due to macroeconomic headwinds and other competitive pressures. I continue to believe in Blink Charging’s superior platform and revenue generating abilities as public spending increases and believe they are severely undervalued relative to the market potential.
I am highly bullish on Blink Charging’s long-term prospects.
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