Clean energy stocks have been on fire over the last six months as investors have bet on the future of electric vehicles and renewable energy electricity. And nearly every part of the industry has been pulled higher.
As clean energy stocks have risen, some have gone so far that they could be set for a crash. Three of our Foolish contributors think Blink Charging (NASDAQ:BLNK), Plug Power (NASDAQ:PLUG), and Clean Energy Fuels (NASDAQ:CLNE) are overvalued and set for a big pullback.
A head-scratcher in EV charging
Travis Hoium (Blink Charging): The idea of building and owning a large network of electric vehicle charging stations seems like a great idea as EV sales grow, and that’s why Blink Charging has become one of the hottest stocks of the past year. But the company may not be what it appears to be, and is absurdly valued today.
Let’s start with the business model. Blink Charging is primarily a company that makes and sells EV chargers. It sells them to other charging networks, commercial building owners, and homeowners. Of the 15,716 charging stations it had deployed as of Sept. 30, 2020, 8,772 were sold to third parties and not on Blink’s network. In the first three quarters of 2020, 69% of revenue was from hardware product sales. Let’s be clear — to date, most of what the company does is make and sell a hardware product, which doesn’t involve owning the charging network and doesn’t have recurring revenue.
A smaller percentage of the company’s chargers end up on what’s called the Blink Network, which had 6,944 chargers at the end of September. These are chargers that generate recurring revenue from EV charging and other fees. In the first three quarters of 2020, $800,000 out of $3.8 million in revenue was generated from charging and network fees.
What shouldn’t be overlooked is just how small these numbers are. In the last year, Blink Charging has generated just $4.5 million in revenue, which is incredible for a company with a $1.7 billion market cap. And the losses for Blink Charging are nearly three times revenue.
The valuation of Blink Charging is crazy and the charging network doesn’t have as many chargers as investors might think, but what I think really hurts Blink Charging is just how fragile its competitive advantage is. EV chargers are a commodity, electricity is a commodity, and the plug connection between chargers and EVs is an industry standard. Anyone can install a charger anywhere at a relatively low cost. I don’t see how even the best charging network will have any competitive advantage, and EV charging certainly isn’t the kind of business I would pay a huge premium for today.
Potential, but pricey
Howard Smith (Plug Power): Plug Power is counting on a hydrogen economy, and it has been making some moves to position itself for that future. In the past two months, it has announced three deals to expand its…
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