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EV company with almost no income records 3000% gain in 8 months
(Bloomberg) – There is nothing in Blink Charging Co.’s finances to suggest this is one of America’s hottest stocks. It has never recorded an annual profit in its 11 year history; he warned last year that he could go bankrupt; it is losing market share, generating anemic income and has gone through management in recent years. And yet, it’s a hot stock. Investors have offered a 3,000% rise in Blink’s stock price over the past eight months. Only seven stocks – out of about 2,700 worth at least $ 1 billion – increased further during that time. The reason: Blink is a green energy company that owns and operates charging stations that power electric vehicles. And if investors are certain of one thing about the mania sweeping the financial markets, it’s that green businesses are must-have and must-have investments of the future. No action captures this euphoria better than Blink. With a market cap of $ 2.17 billion as of Monday, its enterprise value-to-sales ratio – a common measure to gauge whether a stock is overvalued – has exploded to 481. For some context, at Tesla Inc. – the darling of the EV world and a company with a very rich valuation itself – that number is only 26. “It’s all wrong,” said Andrew Left, founder of Citron Research. “It’s just a pretty name that caught the attention of retail investors.” Citron was one of the few companies to bet against Blink last year, putting in short trades that would pay off if the stock price fell. This is one of many bets against stocks favored by the crowd of retail investors who opposed Citron – GameStop Corp. being the most publicized – and prompted Left to declare on Jan.29 that the company was abandoning its research on shorts – of sales targets. Overall short interest on Blink – a measure of the amount of stock bets – has fallen to less than 25% of free float stocks from over 40% at the end of December. For short sellers, one of the The fact that several prominent figures linked to Blink, including CEO and Chairman Michael Farkas, have been linked to companies that violated securities regulations years ago has raised alarm bells, which Farkas thus dismisses than the other criticisms leveled by the short films. “There have been and always will be opponents,” Farkas said in an email. “When I founded the company, opponents wondered if the switch to EV was real. Now, as the value of our business increases, the naysayers tend to be the short sellers. See also: Bloomberg Intelligence Environmental, Social, and Corporate Governance Dashboard In Focus Making money on invoicing is, historically, a losing proposition. In theory, a model like Blink’s, which involves both the sale of equipment and the collection of user fees, could become consistently profitable as government support accelerates the adoption of EVs. But no one has yet. “This market is still too small and at an early stage,” said Pavel Molchanov, analyst at Raymond James & Associates. “It will take time for the economies of scale to materialize.” Even by fairly indulgent industry standards, Blink’s revenue is meager, totaling around $ 5.5 million in 2020. ChargePoint Inc., which has announced plans to go public through a special-purpose acquisition company the 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 load network than Blink but more than double sales – around $ 14 million in 2020. Despite the extremely high revenue figures different, the 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 as to the ability of the company to continue operating within a year,” a mandatory disclosure when a company does not have enough cash on hand. 18 months of spending. “Electricity is real. The stock prices of companies in the sector are not, ”said Erik Gordon, assistant professor at the Ross School of Business at the University of Michigan. “The dot-com boom produced real businesses, but most of the overpriced dot-com companies were bad investments. The electric boom will be the same story. Some great companies will be built, but most investors who hunt companies at incredible prices will cry. Yet the recent market boom has breathed new life into Blink, allowing it to raise $ 232.1 million through a stock offering in January. Roth Capital Partners recommended buying the stock as recently as Friday, giving it a price target of $ 67, 29% above the current level. Shares have fallen 2.3% to $ 52.10 in New York on Monday. The company’s outlook hinges on exponential EV growth, and Farkas in January discussed plans to roll out around 250,000 chargers “over the next several years” and often touts the company’s capacity. to generate recurring income from its network. Currently, the company says it has 6,944 charging stations in its network. An internal map of Blink’s public fleet lists approximately 3,700 available stations in the U.S. In contrast, ChargePoint has a global public and private charging network more than 15 times the size. Unlike some of its competitors, the model Blink’s revenue is based in part on increased usage. rates, which for now remain in the “single digit lows” too low to generate significant income, Farkas said on an earnings call in November. He told Bloomberg that usage will increase as electric vehicles become more popular. For most chargers in use today, usage likely needs to reach 10-15 percent to break even, although profitability depends on many other factors such as the company’s business model, electricity tariffs and According to Nick Nigro, founder of Atlas Public Policy, Blink was one of the early market leaders among charging companies, but has lost its lead and now controls around 4% of the industry in Level 2 public charging, an electric car policy and consultancy firm. Blink also acknowledged “material weaknesses” with its financial reporting, revealed in documents filed by the United States Securities and Exchange Commission dating back to 2011. The company says it hired an accounting consultant to review its controls and history. Origin StoryBlink’s colorful origin has been a prime target for short sellers. It dates back to 2006 when it was established as a shell company New Image Concepts Inc. to provide top-notch personal consulting services related to grooming, wardrobe and entertainment, according to a filing from the DRY. In December 2009, the company entered into a share exchange. deal with Car Charging Inc. Farkas joined the company as CEO in 2010, after working as a stockbroker and investing in companies such as Skyway Communications Holding Corp., which the SEC viewed as a “pump and dump ”during the years when Farkas held stock. (Farkas said he was a passive investor, was unaware of any wrongdoing and “had no involvement in Skyway’s business.”) In 2013, Farkas oversaw the purchase of $ 3.3 million from bankrupt Ecotality by Car Charging, which had received more than $ 100 million in grants from the US Department of Energy to install chargers across the country. The company later changed its name to Blink. Since then, Blink has been in the throes of leadership turnover, with three of the five board members leaving between November 2018 and November 2019. The company has had two CFOs and three CEOs since 2017. One Former COO, James Christodoulou, was fired in March 2020. He sued the company, accusing it of potential securities violations, and struck a deal with Blink, who denied any wrongdoing, for 400,000 $ in October. Blink’s largest shareholder whose capital contributed to the company’s listing on Nasdaq in 2018, and the company he ran were indicted last year for failing to register as a stock broker when it would have sold billions of shares unrelated to Blink. He said he has since divested from Blink and now owns “a relatively small number of common shares” following a resolution of a warrants dispute with the company. Keener denies the SEC allegations. Farkas told Bloomberg that he severed all ties with Keener, was unaware of any ongoing investigations while they worked together and that he was aware of no wrongdoing by Keener. shareholder. On January 12, after shares hit record highs, he sold $ 22 million in shares, according to Bloomberg data. Farkas’ total compensation, including stock awards, totaled $ 6.5 million from 2016 to 2019, more than half of the company’s revenue. His 2018 compensation included $ 394,466 in commissions to Farkas Group Inc., a third-party entity he controlled and which Blink had hired to install chargers. Farkas said his compensation was warranted given that he had personally invested in the creation of the company and had been doing so for many years. Most recently, Blink’s board member Donald Engel followed the CEO’s lead: he sold more than $ 18 million in stock in the past two weeks (update stock price action in 15th paragraph and market value in fourth) for items like this, please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP
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