Since November of last year, Blink Charging (NASDAQ: BLNK) has experienced a notable decline in its stock price, down approximately 28%.
This is in stark contrast to the S&P Kensho Electric Vehicles index, which has remained relatively stable during the same period. However, the short-term trends offer a slightly more optimistic view.
Year-to-date, Blink Charging’s stock has decreased by 5.9%, a marginally better performance compared to the index’s 6.2% decline. This raises the question: can Blink Charging emerge as a standout in the EV industry, or will it continue to struggle?
Revenue Growth: Strong but Slowing
Blink Charging’s strong revenue growth has been a significant selling point, boasting a compound annual growth rate (CAGR) of 126% over the past five years. The company’s Q1 2024 results show a 73% year-on-year increase in revenue, which, while strong, represents a deceleration from previous growth rates.
For instance, 2023 saw a 130% increase, and Q4 2023 reported an 89% year-on-year rise. This slowdown in growth coincides with a broader deceleration in the US EV market, where sales grew by only 2.6% year-on-year in the last quarter, compared to a 46.4% increase in Q1 2023.
Potential for Guidance Upgrades
Despite the apparent slowing of growth, Blink Charging may still exceed its revenue projections for 2024, which range between $165-$175 million. At the midpoint, this represents a 20% increase. Three factors support the possibility of a guidance upgrade:
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Historical Performance Exceeds Guidance
Historically, Blink Charging has surpassed its revenue guidance. In 2023, actual revenues exceeded the midpoint of its initial guidance by 34%. The company subsequently raised its guidance, yet the actual figures still surpassed the upper end of these revised expectations by approximately 6%.
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Strategic Business Developments
Recent business developments provide grounds for optimism. Notably, Blink Charging has been selected as the official EV charging services provider for the State of New York, which had the sixth largest number of EV registrations as of July 2023.
Additionally, partnerships with organizations such as the UK’s parcel delivery provider Evri and the City of Frederick, Maryland, further bolster its growth prospects.
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Market Dynamics and Tesla’s Influence
The EV market’s dynamics also present a mixed but hopeful picture. The decline in Tesla’s market share has affected overall EV sales, but several other manufacturers have seen significant growth.
In Q1 2024, nine EV manufacturers reported over 50% sales growth. Moreover, Blink Charging has highlighted continued growth in European markets, particularly in Belgium, the Netherlands, and the UK.
Gross Margin Expansion
Despite the slowing revenue growth, Blink Charging has achieved notable improvements in its gross margin. In Q1 2024, the gross margin rose to 36%, up from 29% for the full year 2023 and 25% in Q1 2023.
This improvement is attributed to a decrease in the cost of revenues, which fell to 59.6% of revenues compared to 68.4% for 2023. However, the company has forecasted a gross margin of 33% for the full year 2024, suggesting some softening in the coming quarters.
Approaching Adjusted EBITDA Profitability
Blink Charging is nearing adjusted EBITDA profitability, with a significant reduction in adjusted EBITDA loss by 43% to $10.2 million in Q1 2024. This progress follows a near tripling of gross profits and a 13% reduction in operating expenses.
Consequently, the EBITDA levels have decreased by 48%, indicating a positive trajectory towards profitability.
Market Multiples and Investment Outlook
Despite improvements in some financial metrics, Blink Charging’s market multiples present a less convincing case for investment. Its trailing twelve months (TTM) price-to-sales ratio stands at 1.52x, an improvement from 1.71x previously.
However, the forward price-to-sales ratio has increased to 1.89x from 1.58x. These ratios are higher than those of peers like ChargePoint Holdings (CHPT), which currently faces its own set of challenges, including revenue contraction and shrinking gross profits.
Blink Charging: Potential and Challenges
Blink Charging remains a company with significant potential, but it faces considerable market challenges. The slowing growth in the US EV market and the company’s own revenue projections suggest a cooling off period.
While there is potential for a guidance upgrade and continued business development, the stock’s future performance is uncertain. Investors should remain cautious and consider holding onto their positions until there are clear signs of financial improvement or a turnaround in the broader EV market.
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I’m Jackson Hartwell, a writer who specializes in dissecting current business events. I’m dedicated to providing you with clear and concise insights into the world of politics, making it easier to understand the latest news and developments.
