Blink (Ticker: BLNK) - Brief Breakdown
In our Brief Breakdowns, we pick a stock and take opposite sides – one of us presents the bullish argument and the other presents the bearish argument.
Company Description
Blink Charging Corporation (NASDAQ Ticker: BLNK) is an American company that specializes in the development and maintenance of charging stations for electric vehicles (EVs). On May 11, Blink announced that it would be expanding its global footprint by acquiring the European EV charging operator Blue Corner N.V.. Blue Corner is based in Belgium and at the time of the acquisition had over 7,000 charging ports located across Belgium, Luxembourg, Netherlands, and France.
Quantitative Analysis
At the time of this writing (5/16/2021), Blink is trading at $29.95, with a 52-week range of 1.55 – 64.50 and a market cap of 1.1B. Each share lost $0.18 ($7.4 million in total) in Q1 of 2021 compared to $0.11 per share ($3.0 million in total) in Q1 2020. The number of Blink-owned charging stations contracted or deployed during the quarter grew by >370% and total revenue increased by 72% compared to Q1 of 2020. Although BLNK reported a larger loss in Q1 of 2021 than in Q1 2020, it could point to Blink’s acquisition of Blue Corner and their commitment to growing their global footprint. BLNK also completed an equity raise of $232 million in order to build and maintain more charging stations going forward. You can view a breakdown of BLNK’s earnings from Q1 2021 here and view their 2020 annual 10K here.
Qualitative Analysis
Blink is one of the top companies producing EV charging stations in the world. As discussed in our brief breakdown of Nikola, the EV sector is gaining momentum, with global sales of 2.5 million in 2020 and an IHS Markit estimated rise of 70% in 2021. The rise in EV sales will require more and more charging stations and that is where BLNK has tried to carve out a section of the market. Although there is a lot of competition coming into this space, BLNK owned and contracted charging stations grew by 370% in Q1 of 2021 versus Q1 of 2020. In the previous quarter, BLNK contracted, sold, or deployed an impressive 1,600 commercial and residential EV charging stations.Blink hopes to continue their upward momentum moving forward, but increased market competition and reliance on the volatile EV industry, their future remains uncertain. Their recent acquisition of Blue Corner and its large European footprint, increased revenue, and recent equity raise should bolster confidence that Blink can keep their positive momentum, at least in the short- to mid-term.
Bullish Thesis
Here are three points to support the bullish thesis:
Wide Range of Business Models: Blink currently offers four different business models to allow business, cities, and commercial buildings to provide charging stations and benefit both the owner of the location and Blink. The four different business models are described as hybrid owned, Blink as a service, Blink owned, and Host owned. In the hybrid owned program, Blink covers the cost of equipment, operations, and administration, and the owner of the property is responsible for making the site EV charger ready. The Blink subscription program provides an EV charging station with low upfront costs and full control of ownership. In some locations, the chargers are completely Blink owned, where Blink provides the installation, equipment, operations, and administration (Blink then shares a portion of revenue with the host of the charging station). The final business model is the host owned program, where the host is the sole owner and operator of their EV charging stations. This range of models allows Blink to target a large amount of potential locations for expanding their footprint. With increasing numbers of EVs and market competition, providing as flexible a product as possible via a diverse set of business models helps set Blink apart from their competition.
Growth Potential: As mentioned previously, Blink recently acquired Blue Corner and secured $232 million in a recent equity raise. Currently, Blink owns approximately 8% of the overall market share of EV charging stations and did not previously have any charging stations outside of the United States. Now Blink has acquired a company with experience in the European market in order to expand their global footprint and their equity raise helps provide capital to cover up front costs. Blink also recently announced that they have received a grant from the state of Ohio Environmental Protection Agency to deploy 144 Blink operated charging stations in the state as well as a follow-on order from InterEnergy for an additional 150 fast-charging stations. This is one of several such announcements, all of which can be found here. This will allow BLNK to expand and help supply EV charging stations in a rapidly expanding market.
Growth of Electric Vehicles: This may seem like a given, but it is a fact that simply cannot be ignored. According to QuoteWizard, there are approximately 2.9 alternative fuel stations and 9.7 electric charging outlets per 10k electric vehicles. For reference, there are 115 thousand gas stations for the approximately 280 million gas powered vehicles on the road, although both of those numbers are declining. The adoption rate for electric vehicles has been greater in states with greater availability to charging stations, therefore there will be a push to get more charging stations in each state in order to increase the adoption rate of EVs. There are also 47 federal incentives to purchase electric vehicles, which include grants, tax breaks, loans, and much more. As people are incentivized to purchase electric vehicles and more get on the road, the demand for charging stations both at businesses and in homes will grow. BLNK is well-positioned to meet this demand.
Bearish Thesis
Here are three points to support the bearish thesis:
Increasing Market Competition: Current lack of infrastructure - including too few charging stations - is a crucial limitation for large-scale adoption of EVs. However, the EV charging station market is expected to grow rapidly over the next 5-10 years, with some estimating that the global market size will reach 30,758 thousand units by 2027, up from an estimated 2,115 thousand units in 2020 (CAGR of 46.6%). Unfortunately for BLNK, they are up against stiff competition. They must not only compete against EV-specific companies like Tesla and ChargePoint (both of whom have market caps well above BLNK), but they also have to compete against larger, less-specific, and higher cap companies like Siemens and Schneider Electric. Investors should keep a close watch on how BLNK handles this competition.
COVID-Related Changes in the Market: COVID-19 disrupted almost all industries across the world. There are several COVID-related shifts that make us bearish on the automotive industry in general, which may bleed over into the EV charging station market. First, many companies shifted to remote work, allowing employees to work from home full time. For example, Mark Zuckerberg, CEO of Facebook, stated last May that ~95% of FB employees were working remotely. According to a recent survey, 82% of company leaders plan to continue to allow employees to work remotely. While trips to and from work are far from the only use case scenario for vehicles, increased work-from-home trends will likely reduce the demand for vehicles and thus the demand for charging stations. Second, the pandemic was met in many countries across the world with monetary policy that will likely have negative economic consequences. Following market collapse in 08-09, the automotive industry in the U.S. experienced a sharp decline in sales. Recent jobs and CPI reports suggest that, at least in the U.S., we may see similar market trends. This is certainly something to keep in mind when contemplating investing in companies in the automotive industry.
Lack of Profitability: Blink continues to suffer net losses and plans to do so for the foreseeable future. According to their 2020 annual report, Blink had net losses of $9.6 million and $17.8 million in 2019 and 2020, respectively. Although they’ve shown a relatively strong capacity to raise capital, they will have to eventually prove profitability on their own products. They admit themselves that “our revenue growth ultimately depends on consumers’ willingness to adopt electric vehicles in a market which is still in its early stages.” Investors should keep a close eye not only on Blink and other EV charging station companies, but on the EV market in general. If EV adoption is too slow, the demand for charging stations may stagnate and companies with high losses may fall by the wayside.
Learn more about Blink Charging Corporation here.
Disclosure: The article was written by Daniel Kuhman and Brandon Keys, and it expresses the author's own opinions. They are not receiving compensation for it. They have no business relationships with any company whose stock is mentioned in this article. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. Brandon and Daniel are not financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.