In Bloomberg, Mark Chediak and Catherine Traywick warn investors of the extreme valuations EV companies are trading for today. They write (abridged):
There is nothing about the finances of Blink Charging Co. that would suggest it’s one of the hottest stocks in America.
It’s never posted an annual profit in its 11-year history; it warned last year it could go bankrupt; it’s losing market share, pulls in anemic revenue and has churned through management in recent years.
And yet a hot stock it is. Investors have bid Blink’s share price up 3,000% over the past eight months. Only seven stocks — out of about 2,700 that are worth at least $1 billion — have risen more over that time. The reason: Blink is a green-energy company, an owner and operator of charging stations that power up electric vehicles. And if investors are certain of one thing in the mania that is sweeping through financial markets, it is that green companies are can’t-miss, must-own investments of the future.
No stock better captures this euphoria than Blink. With a market cap today of $2.2 billion, its enterprise value-to-sales ratio — a common metric to gauge whether a stock is overvalued — has blown out to 493. For some context, at Tesla Inc. — the darling of the EV world and a company with a very rich valuation itself — that number is just 25.
Even by the industry’s fairly forgiving standards, Blink’s revenue is meager, totaling an estimated $5.5 million in 2020. ChargePoint Inc., which announced plans to go public via a special purpose acquisition company last year, generated $144.5 million in revenue in 2020, according to a January filing. EVgo Services LLC, which is nearing a similar deal to go public through a SPAC, has a smaller charging network than Blink but more than double the sales — an estimated $14 million in 2020. Despite the wildly different revenue figures, all three companies have an enterprise value of between $2.1 billion and $2.4 billion.
Blink warned in a May filing that its finances “raise substantial doubt about the Company’s ability to continue as a going concern within a year,” a required disclosure when a company doesn’t have enough cash on hand for 18 months of expenses.