Ari Zoldan | Jul 22, 2021 06:29AM ET
It is common knowledge that moving forward, electric vehicles (EVs) will dominate the transportation industry. No matter if the vehicle is passenger driven or self-driven, a passenger vehicle or a commercial vehicle, a Tesla (NASDAQ:TSLA) or a Ford (NYSE:F), we know one thing: that everything will be powered by electric fuel.
Blink Charging (NASDAQ:BLNK) is one such company that has been significantly contributing to the electric revolution before it became mainstream. Founded in 2009, Blink Charging was one of the few companies that had a vision for slowing climate change by reducing carbon emissions produced by transportation.
The EV charging industry is a very broad ecosystem. There are several business processes involved before a company can market EV charging services to customers. BLNK is the only company in the U.S. to own each part of the EV charging business process, from start to finish. It manufactures and sells the EV charging hardware, operates the Blink Network, and owns and operates EV charging stations across the America and Europe region.
Its biggest competitor, ChargePoint Holdings (NYSE:CHPT), sells EV hardware and operates its own network, but doesn’t own and operate EV charging stations.
For its EV charging service, Blink offers a wide range of partnership models to suit a partner’s requirements. This ensures that the Blink network proliferates while earning stable and predictable revenues.
Data Source: roped in the co-founder of ChargePoint, Mr. Harjinder Bhade, as its CTO in April 2021. Mr. Bhade is a seasoned EV charging executive, and his years of experience as a C-level executive at ChargePoint will add greater value to Blink. It will be interesting to watch how Blink plans to take on the likes of ChargePoint in the future.
Amidst the huge EV wave, BLNK has rallied steeply in the last 12 months. But is it only the wave?
Blink delivered triple-digit revenue growth of around 126% and about 256% gross profit growth in FY 2020. The market expects that triple-digit sales growth will continue at least until 2023, predicting FY 2023 sales of $52 million.
It brings our forward P/S ratio at 34. Although the ratio is quite high, we should not undermine the growth potential of Blink. We could see a huge amount of cash flowing into Blink as the direct beneficiary of the Bipartisan Infrastructure Framework that allocated $7.5 billion of funds towards building U.S. EV infrastructure, which aims to build 500,000 EV chargers across the U.S.
Given that Blink has very little debt on its books and the huge growth potential of the EV market, I do not find any clear catalyst that will justify a decline in the company’s valuation.
Blink seems likely to continue to enjoy high valuations, and its share price may well soar as the company continues to grow its network.
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