Bloomberg
EV company with almost no income 3,000% profit in 8 months
(Bloomberg) – There is nothing about the finances of Blink Charging Co. indicating that it is one of the hottest stocks in America; it has never made an annual profit in its 11-year history; he warned last year that it could go bankrupt; he loses his market share, draws an anemic income and has pulled through management over the past few years. Investors have increased Blink’s share price by 3,000% over the past eight months. Only seven shares – out of about 2,700 worth at least $ 1 billion – rose more during that time. The reason: Blink is a green energy company, an owner and an operator of charging stations that drive electric vehicles. And if investors are sure of one thing in the mania that is sweeping through the financial markets, it is that green companies may not have the essential investments of the future. No share can capture this euphoria better than Blink. With a market capitalization of $ 2.3 billion today, the value of the company to its sales – a general measure of whether a stock is too high – has blown to 493. For a certain context, at Tesla Inc. – the darling of the EV world and a company with a very rich valuation itself – the number is just 25. “Everything about it is wrong,” said Andrew Left, founder of Citron Research. “It’s just a cute name that caught the attention of small investors.” Citron was one of a handful of companies that bet against Blink last year and made short sales that would pay off if the share price fell. This is one of the different inputs against equities favored by retail investments that have faced Citron – with GameStop Corp. which is the most popular – and urged Links to declare on January 29 that the company will briefly abandon its research. targets to sell. The overall short-term interest rate on Blink – a measure of the amount of input against the share – fell to below 25% of the free-floating shares from more than 40% at the end of December. For the short sellers, one of the things that has been alarmed is that several figures linked to Blink, including CEO and chairman Michael Farkas, have been linked to companies that have been under the effect of security regulations for years. Farkas rejects this and the other criticism leveled at the shorts. “There were and still will be no indications,” Farkas said in an email. ‘When I set up the business, the naysayers asked if the move to EV was real. While the value of our business is now increasing, the trends are usually the short sellers. See also: Bloomberg Intelligence’s instrument panel for environmental, social and corporate governance In the cross hair To make money on the levy is historically a lost proposition. In theory, a model like Blink, which involves both equipment sales and the collection of user fees, could become consistently profitable as government support accelerated the adoption of EV. But no one has done it yet. “This market is still too small and early in the stage,” said Pavel Molchanov, an analyst at Raymond James & Associates. “It will take time before economies of scale are realized.” Even by the industry’s fairly forgiving standards, Blink’s revenue is low at about $ 5.5 million in 2020. ChargePoint Inc., which has announced plans to announce through a specialty sourcing company. generated $ 144.5 million in revenue last year in 2020, according to a January submission. EVgo Services LLC, which is approaching a similar agreement to be announced by a SPAC, has a smaller levy network than Blink, but more than doubles sales – an estimated $ 14 million in 2020. Despite the very different revenue figures , all three companies have an operating value of between $ 2.1 billion and $ 2.4 billion. Link warned in a May statement that its finances “raised serious doubts about the company’s ability to continue as a going concern within a year”, a required disclosure when a company does not have enough cash on hand for 18 months’ expenses. “Electricity is real. The share prices of companies in space are not, ”said Erik Gordon, an assistant professor at the Ross School of Business, at the University of Michigan. ‘The dot-com boom has yielded some real companies, but most of the expensive dot-com companies have been bad investments. The electric tree will be the same story. Some big companies will be built, but most investors who chase companies with insane prices will cry. ‘The recent boom in the market has nevertheless breathed new life into Blink, enabling it to raise $ 232.1 million, even though it was a stock offer in January. Roth Capital Partners recently recommended buying the stock, which gives a price target of $ 67, 26% above the current level. Shares rose 6.3% to $ 56.71 in New York on Monday at 10:53 p.m. The company’s prospects are dependent on exponential EV growth, and Farkas in January discussed plans to deploy around 250,000 loaders over the next few years, often boasting the company’s ability to generate recurring revenue from its network. . At the moment, the company says it has 6,944 charging stations in its network. An internal map of Blink’s public fleet contains approximately 3,700 stations available in the United States. ChargePoint, on the other hand, boasts a global public and private charging network that is more than 15 times larger. Unlike some of its competitors, Blink’s revenue model depends in part on improving usage. Farkas, which currently lives in the ‘low single digits’, is too few to generate significant revenue, Farkas said during a revenue call in November. He told Bloomberg that usage will increase as EVs become more popular. For most chargers currently in use, usage probably needs to reach 10% -15% to equalize, although profitability depends on many other factors, such as a business’ business model, electricity rates, and According to Ryan Fisher, senior contributor to BloombergNEF , cost of capital was an early market leader among levy firms, but has lost its lead and currently controls about 4% of the sector in Level 2 public levy, said Nick Nigro, founder of Atlas Public Policy. an advisory and policy firm for electric cars. Blink also acknowledged “significant weaknesses” in its financial reporting, which dates back to 2011 in the U.S. Securities and Exchange Commission. The company hired an accounting consultant to review its checks and make Origin StoryBlink’s colorful origin story a primary target for short sellers. According to an SEC filing, the company has formed a shell business, New Image Concepts Inc., to provide a top-loading consulting service related to grooming, wardrobe and entertainment. In December 2009, the company entered into a stock exchange. agreement with Car Charging Inc. Farkas joined the company as CEO in 2010, after working as a stockbroker and investing in companies, including Skyway Communications Holding Corp., which the SEC considered a ‘pump-and-dump scheme’ during the years in which Farkas owned shares. . (Farkas said he was a passive investor, unaware of any crimes and ‘had no involvement in any of Skyway’s activities.’) In 2013, Farkas oversaw Car Charging’s $ 3.3 million acquisition of bankrupt Ecotality, which received more than $ 100. million in U.S. Department of Energy grants to install chargers nationwide. The company later changed its name to Blink, and since then Blink has been plagued by executive turnover, with three of five board members leaving between November 2018 and November 2019. The company has had two chief financial officers and three chief operating officers since 2017. One former chief operating officer, James Christodoulou, was fired in March 2020. He sued the company, accusing it of possible security breaches, and a settlement with Blink, which denies any breach, reached $ 400,000 in October. Financier Justin Keener, a one-time major shareholder of Blink whose capital helped the 2018 Nasdaq listing in the company, and the company he operated, were charged last year with failing to register as a security trader , while allegedly selling billions of shares unrelated to Blink. He said he had meanwhile resigned from Blink and now owns a relatively small number of ordinary shares as a result of a settlement of a warrant dispute with the company. Keener denies the SEC allegations. Farkas told Bloomberg he had severed all ties with Keener, was unaware of investigations that took place while they were collaborating and had no knowledge of any violation by Keener. The emerging stock brought a windfall in Farkas, the largest of Blink. shareholder. On January 12, after shares rose to a record high, he sold $ 22 million worth of stock, according to Bloomberg data. Farkas’ total remuneration, including share awards, amounted to $ 6.5 million from 2016 to 2019, equivalent to more than half of the company’s revenue. Under his 2018 compensation, there were $ 394,466 in commissions to Farkas Group Inc., a third-party entity he controlled that Blink hired to install chargers. Farkas said his compensation was justified as he had personally invested in founding the business and had had it for years. recently received shares instead of salary. Recently, Blink’s board member Donald Engel took the lead from the CEO. He has sold more than $ 18 million worth of shares in the past two weeks. (Update the market capitalization in the fourth paragraph and the share price in the 15th paragraph.) For more articles like this, please visit us at bloomberg.com. Sign up now to stay ahead of the most trusted business news source. © 2021 Bloomberg LP