Is it safe to buy EV charging stocks like CHPT, EVGO, and BLNK?

Everything related to electric vehicles (EVs) is not doing well in 2024.

EV stocks like Tesla and Nio have all plunged hard this year, shedding over $1 trillion in valuation.

Similarly, EV metals like lithium, nickel, and cobalt have also plummeted, leading to significant losses to mining companies like Glencore and BHP.

EV charging stocks have fallen

Further, EV charging companies have been in a strong downward trend in the past few months.

ChargePoint, a leading company in the industry, has seen its stock crash by over 95% from its all-time high. Its market cap has plunged from over $11.7 billion to $873 million.

The same is true for EVGO, one of the biggest EV charging companies in the US. Like ChargePoint, its market cap has retreated from over $7 billion to $775 million.

Blink Charging’s market valuation has plunged from over $2.46 billion to $232 million.

EVGO vs BLNK vs CHPT stock

Worse, many investors believe that these stocks have more downside to go.

Blink Charging has a short interest of 32% while ChargePoint and EVGO stands at over 10%. A high short interest means that investors believe that the stock has more downside to go in the long term. 

There are a few reasons why these EV charging stocks have plunged.

First, these companies are mostly guilty by association since interest in the EV industry has waned recently.

On Tuesday, Ford became the other company to slash the prices of Mach E, which was once a high popular vehicle. This is a sign that demand has waned since companies rarely cut prices in periods of strong demand.

Other EV companies have slashed prices recently.

Lucid cut the price of its Air Sedan last week in a sign that it is not doing well. Tesla and Rivian have also done the same.

Second, these companies, especially ChargePoint, are cash incinerators that have lost a fortune in the past few years.

That’s because they needed to buy chargers and install them across the country and this trend will continue since the US needs more charging points.

EVGO had an EBITDA loss of $14 million in Q3 while ChargePoint issued a going concern warning.

Further, these companies have diluted their shareholders while the reliability of their stations has led to increased operational costs. 

So, is it safe to buy EV charging stocks?

EV charging stocks have not done well over the years, and as a result, they have become bargains. The fact that EV sales are slowing has made the situation much worse recently. 

However, I believe that there is a room for these companies now that the number of EVs has continued growing in the past few years.

It is estimated that the US has over 1.9 million EVs and this number is expected to continue growing.

Therefore, there is a likelihood that some of these companies will rebound this year as investors embrace a risk-on sentiment. If this happens, I would bet on EVGO and Blink Charging. ChargePoint has so many problems.

The two companies are high-risk and high-reward firms to invest in.

The biggest risk is that they will need to raise additional capital this year, which will lead to more dilution.