What a time it’s been for Blink Charging. In the past six months alone, the company’s stock price has increased by a massive 215%, reaching $2.38 per share. This performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Blink Charging, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free for active Edge members.

Why Is Blink Charging Not Exciting?

We’re glad investors have benefited from the price increase, but we don't have much confidence in Blink Charging. Here are three reasons why BLNK doesn't excite us and a stock we'd rather own.

1. Lackluster Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Blink Charging’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 5.4% over the last two years was well below its five-year trend. We also note many other Renewable Energy businesses have faced declining sales because of cyclical headwinds. While Blink Charging grew slower than we’d like, it did do better than its peers.

2. Cash Burn Ignites Concerns

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Blink Charging’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 85.1%, meaning it lit $85.08 of cash on fire for every $100 in revenue.

3. Short Cash Runway Exposes Shareholders to Potential Dilution

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Blink Charging burned through $53.53 million of cash over the last year. With $25.32 million of cash on its balance sheet, the company has around 6 months of runway left (assuming its $5.79 million of debt isn’t due right away).

Unless the Blink Charging’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Blink Charging until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

Final Judgment

Blink Charging’s business quality ultimately falls short of our standards. Following the recent surge, the stock trades at $2.38 per share (or a forward price-to-sales ratio of 2×). The market typically values companies like Blink Charging based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy. Let us point you toward the Amazon and PayPal of Latin America.

Stocks We Would Buy Instead of Blink Charging

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