Today we have an extremely speculative idea.: take stock of Blink Charging electric car charging service provider (NASDAQ: BLNK), to make money on the hype in this area.
Growth potential and validity: 27% behind 12 Months; 15% per year for 15 years.
Why stocks can go up: there is an unhealthy hype around the electric car industry, which will allow pumping up the company's quotes.
How do we act: we take shares now by 36 $.
When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
What the company makes money on
The company manufactures equipment for charging electric cars and provides services in this area.. She has 4 customer service models:
- The gas station is owned by an independent operator. All expenses for the owner: equipment, installation, electricity, service.
- Hybrid model: installation of equipment on the operator, and everything else on Blink.
- The gas station is owned and operated by Blink itself..
- Blink filling service. The company provides equipment and service, and everything else on the operator. Blink provides services as a cloud company, providing access to refueling management software.
In the first case, all proceeds from the gas station belong to the operator, in the second and third, the operator shares the proceeds with Blink: the terms of the contract depend on many parameters - from the location of the gas station to the terms of the contract itself, - in the fourth option, Blink receives revenue from a subscription model.
According to the company's annual report, its revenue is divided as follows:
- Refueling cars - 12,39%. Gross margin here - 48,57% from segment revenue.
- Sales of equipment - 71,14%. Segment gross margin — 35,49%.
- Network Fees - 5,53%. Services, which the company provides to gas station operators in its cloud service. The segment is unprofitable: cost is higher than revenue 49,5%.
- Guarantee - 2,07%. Segment, in which customers extend the warranty period for money. Unprofitable segment: the cost of revenue here exceeds its volume by almost three times.
- Grants and deductions - 0,34%. The prime cost here is zero, this is done by the accounting department.
- Other - 8,53%. Gas station service, which companies do not own. Gross margin not shown here.
From that, what is stated in the report, can be solved, that the company operates only in the USA, but there are several Blink gas stations in Africa and South America.
The company is unprofitable.
Arguments in favor of the company
Electric cars! Electric cars are everywhere! Electric cars today are a very small part of the total sales of vehicles in the world., but experts around the world predict a rapid increase in their share of 2030 year. And in the USA, where electric cars are 1% car market sales, they want to bring their share to 50% over the next 9 years.
All this requires the rapid expansion of the network of charging stations throughout the country - there is a possibility, that investors will start pumping Blink shares in anticipation of a miracle. The company has a small capitalization in 1,52 billion dollars, so the effect of such pumping can be very serious.
There is a possibility of pumping up the shares of the ESG lobby, in whose interests it is not to let an enterprise so important from an ideological point of view die ingloriously. After all, such an example will inspire investors to invest a lot of money in this industry, contrary to economic logic..
Given the high level of engagement and politicization of the American corporate sector, I wouldn't be too surprised, if I knew about it, that some large corporation has entered into an agreement with Blink to create a system of "electric charging" for their employees. Blink's business impact won't be as big, but such news can affect the company's quotes disproportionately.
Can buy. Blink may well be bought by some large company. The likely scenario is, under which our issuer will be bought by a large oil and gas company, which in this way will show ESG-investors, that it "understands the importance of the energy transition". But it is also likely that the company will be bought by a larger network of “electric filling stations” ChargePoint. Considering the unprofitability of ChargePoint itself, that would be a perfectly logical solution, which would allow it to increase its market share and margin.
What can get in the way
Levels. Blink's main problem: most of its filling stations belong to the second level stations, which can fully charge the car in 3-8 hours. Level 3 stations can charge a car in less than an hour, which is more suitable for the mass introduction of electric cars. But Blink's transition to the production of third-level stations will require a lot of money., which is not very good, since the company is unprofitable.
And if she does not develop stations of the third level, then risks losing to those, who will develop this direction. However, you can be comforted here by those, that not all electric cars can be charged at third-level stations.
Concentration. According to the company's annual report, she has some big clients. One gives 25% proceeds, one more account 11%. One major customer gives 12% sales in the segment of the sale of goods. Revisiting relationships with any of these clients could have a negative impact on the company..
More fundamentality, what it seems. Like gas stations, the company ultimately depends on the situation with the mobility of the population in the United States - in other words, from that, how many people in the US travel. This mobility is now being restored, but the spread of new strains of coronavirus could ruin everything. In Blink's case, that would mean slower growth — and that's bad., because they invest in such startups, usually, in hopes of "strong revenue growth". When they're not so fast, disappointment of investors is expressed in the fall of quotations.
Unprofitableness. Non-profitability guarantees the company price volatility. And although Blink has a lot of money in the accounts - almost in 12 times the amount owed, - the unprofitability of its operations will reduce these reserves quite quickly. So you should be mentally prepared for the bankruptcy of the company.
What's the bottom line?
Shares can be taken now for 36 $, and then there are two options:
- wait 46 $, who asked for shares back in February of this year. Think, that the enthusiasm around the expected spread of electric cars will allow us to pump quotes to the level we need in the next 12 Months;
- keep Blink shares following 15 years, to see, how she or herself will succeed, or will be bought by someone, or go bankrupt.
But it must be understood, that this idea is very volatile, and therefore if you are not ready to put up with the threat of bankruptcy of the company, then you shouldn't touch these shares. The prospects of the company as a business seem dim to me, and the main calculation here is precisely on the hype around the topic with electric cars.
