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Both companies will play a role in building an electric vehicle charging network, but which is the best stock to own right now?
Investors are looking to 2022 and putting together their portfolios to catch what’s set to be a big year for electric vehicle (EV) stocks. One reason for this enthusiasm is the performance of electric vehicle charging stocks in 2021. Two of these companies are charge point (New York Stock Exchange: CHPT) And flash charge (Nasdaq: BLNK) Stand out among the rest.
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If you invested in CHPT shares 12 months ago, you would have a gain of 64%. And if you invest in BLNK shares at that time, the profit will be even greater, up to 240%. Both easily beat gains of 30% in the S&P 500 or 34% in the NASDAQ.
However, as investors in these stocks can attest, it has been a bumpy ride. Both stocks are down significantly from their 52-week highs. One reason for this is the delay in an infrastructure bill that now appears to be moving through Congress.
In fact, both stocks had a good run on November 8 when the bill passed through the House of Representatives. With that hurdle removed, it’s time to consider which of these stocks present a better buying opportunity.
Does network size make a difference?
If your answer to this question is yes, then ChargePoint is clearly the stock for you. The company has more than 112,000 charging points spread across North America and Europe. Blink Charging has just over 28,000 charging devices as of its latest earnings report. ChargePoint claims a 70% market share in the most popular Tier 2 chipset.
This difference in size is reflected in the revenue of the company in question. In the most recent quarterly data available, ChargePoint generated $56.12 million in revenue versus $6.4 million for Blink charging.
But is a larger network size enough? Maybe and maybe not.
Profit is still elusive
Neither of these companies is profitable and neither is likely to be close. This in and of itself is not very worrying. Although neither company is ‘new’, it is still in the early stages of scaling up its operations to meet global demand.
However, as mentioned above, this is a competitive business and it is not entirely clear how companies will be able to generate the revenue needed to turn a profit. It became clear that they would not be able to do so simply by charging for electricity. This means that they simply cannot make their way to profitability even though ChargePoint is geared towards profitability by 2024.
What about the latest results?
Blink Charging was the first to report a profit in the third quarter and posted a solid revenue figure. There was a particularly impressive figure in the service’s revenue of $1.1 million. That was a 425% increase over the same quarter of 2020. But perhaps more importantly, it almost doubled the $586,173 it recorded in the same category in the previous quarter.
This revenue category reports how much the company’s chargers are used as well as revenue associated with the ride-sharing service program Blink Mobility and revenue from the company’s acquisition of Blue Corner.
Investors note that BLNK stock jumped more than 8% higher in early trading the day after the report was released. That means, for now, investors are ignoring a core figure that showed a net loss of $15.3 million, or 36 cents per share.
ChargePoint will get its chance to impress investors when it announces its earnings in early December. However, in early trading, Blink’s report is a tailwind for CHPT stock, which is also up 5%.
And the winner is…?
Given the size of its network, growing market share, and perhaps the most likely path to profitability, ChargePoint looks like a better buy as a long-term investment. However, as this week proves, this will remain a volatile category for some time.
In the short term, BLNK stock is a more likely candidate for a short squeeze. In addition to having a short interest rate of approximately 35%, it takes approximately 9 days to cover the short position. By contrast, CHPT stock has a short interest rate of just over 10% and requires about two days to cover a short position.
Analysts’ opinion captured MarketBeat It indicates that BLNK stock has a downside at 11% from its current price while CHPT currently has a 21% upside.