BLNK: Blink vs. ChargePoint: Which Electric Vehicle Infrastructure Stock is a Better Buy?

One way for investors to get exposure to the highly disruptive electric vehicle (EV) space is by investing in companies that are in the EV charging industry. EV charging companies are responsible for manufacturing the charging stations that recharge the batteries used to power electric vehicles.

The shift to clean energy solutions is inevitable, which means there will be a massive transition towards EVs in the upcoming decade. According to Grandview Research, the global electric vehicle charging infrastructure market size was valued at $15.06 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 33.4% from 2021 to 2028.

Two of the most popular EV charging companies are Blink Charging (BLNK) and ChargePoint (CHPT).

Blink Charging stock is up 1,000% in the last year

Shares of Blink Charging have surged over 1,000% in the last 12-months and are currently valued at a market cap of $1.19 billion. The company owns and operates EV charging equipment as well as networking stations in the U.S.

Blink offers a turnkey solution to customers and covers the hardware installation costs upfront. It depends on a revenue-sharing model and as it has to monetize energy sales, the charging prices are comparatively higher.

Blink acquired EV charging operator U-Go Stations last November, helping it to add 44 new locations to the company’s portfolio of charging points. As the U.S. is looking to transform the public transport systems with EVs, Blink has partnered with Lion- an electric company to capitalize and benefit from this trend.

In the September quarter, Blink increased sales by 18% year over year to $0.90 million. In 2020, analysts expect the company to grow sales by 95% to $5.35 million while in 2021 Blink is forecast to grow sales by 104.5% to $11 million.

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This means the stock is trading at a really steep valuation as its forward price to 2021 sales multiple is an astonishing 107.3x.

Analysts remain bullish on the stock and have a 12-month average target price of $52.50 which is 55% above its current trading price.

ChargePoint has a market cap of $7.33 billion

Compared to Blink, ChargePoint is a significantly bigger company and is valued at a market cap of $7.33 billion. The company is a market leader in the charging network segment in North America with a 73% share. Blink on the other hand has an 8% market share, according to a research report from AFDC (Alternative Fuels Data Center).

The company’s customers purchase hardware from ChargePoint and pay for its installation. This is an asset-light model allowing ChargePoint to charge a subscription fee for the networked software. It’s SaaS (software-as-a-service) model ensures a steady stream of recurring income.

ChargePoint also generates revenue by providing after-sales support and warranties. ChargePoint’s customers are generally enterprises or the local municipality. The company’s software allows customers to manage these charging stations which means it does not monetize energy utilization.

In 2020, ChargePoint’s sales stood at $135 million, compared to $147 million in sales in 2019. The COVID-19 impacted top-line growth for ChargePoint and the company should return to revenue growth in 2021. This suggests the price to 2020 sales multiple for ChargePoint is 52.5x.

Analysts are also bullish on CHPT and have a 12-month average target price of $42.67 which is 50% above its current trading price.

The final verdict

Blink and ChargePoint are both speculative names that remain unprofitable and continue to burn cash. However, I believe that ChargePoint’s leadership position created by a first-mover advantage, lower valuation, and a robust business model make it a better EV stock to buy compared to Blink.

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BLNK shares were trading at $35.04 per share on Tuesday afternoon, up $6.42 (+22.43%). Year-to-date, BLNK has declined -18.04%, versus a 4.24% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditya Raghunath

Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...