What happened

The stock of Blink Charging (NASDAQ:BLNK), a maker of charging stations for electric vehicles (EVs), is continuing its wild ride today. Shares soared earlier in the week, rising about 80%, before dropping nearly 30% from the week's high. Today, shares were again up, about 11% as of 10:45 a.m. EST. 

BLNK Chart

BLNK data by YCharts.

So what 

High volatility can be expected with a growth stock like Blink Charging. It soared earlier in the week on momentum in the EV sector. But then a report from short-seller Citron Research had investors selling. 

bull and bear with green and red arrow behind dollar sign

Image source: Getty Images.

It's not just Citron's opinion that makes these shares volatile. The fundamentals should give investors pause, too. 

Now what 

The weekly move in shares may look volatile, but it is nothing compared to what the stock has done year to date. Shares are up more than 1,400% in 2020. 

BLNK Chart

BLNK data by YCharts.

While there is a lot of potential in the EV space along with equipment like charging stations needed to support it, Blink's valuation has gotten ahead of itself. The price-to-sales ratio is approximately 180 right now.  

This level is not sustainable. Either sales need to rocket higher, or the price of shares will come down significantly. In the first nine months of 2020, sales of $3.8 million are up 84% versus the prior-year period. While that level of growth is impressive, it's against such a small base that it's not quite as meaningful. 

Investors who want to own shares in Blink should have them squarely in the speculative portion of a portfolio. And they should be ready for the wild ride to continue.



This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.