Over the last six months alone, Blink Charging (BLNK) stock has risen a whopping 1,550%, making it one of the best performers of the year. It has ridden the wave pushing renewable energy stocks higher, particularly in electric vehicles (EVs) and their disruption of fossil fuels. 

The question for investors is whether it continues to be a buy going into 2021. And the answer may depend on where investors think the industry is headed. 

Electric vehicle getting a charge in a garage.

Image source: Getty Images.

The background for this stock

It's important to understand the story a stock like this is built on. Shares of Blink Charging are now trading at an astronomical level. You can see below that the price-to-sales ratio is now 237, which is unthinkable in any industry

BLNK Revenue (TTM) Chart

BLNK Revenue (TTM) data by YCharts.

Investors are really valuing the company based on the growth story we can tell ourselves. A big part of the narrative is that electric vehicles will become a larger piece of the transportation picture and that will drive both charger unit growth and utilization. 

To go along with that, a high share price can itself be a growth driver if management uses stock sales or acquisitions with stock to expand the charger network. The combination of rising electric vehicle charger usage and the ability to grow the charger network is a powerful story for investors to buy into. But is it a reality? 

What needs to happen next

How can Blink Charging live up to current expectations and actually push the stock higher? There are three things that I think investors should watch: 

First, the installed base of chargers needs to grow quickly. This is what's most under management's control. As of the end of the third quarter of 2020, Blink Charging has deployed 15,716 charging stations, 6,944 of which remain on the company's commercial network. If that charger network expands rapidly, Blink Charging will be one of a small handful of companies to watch in EV charging.

Platforms are another key factor to watch. Apple recently added Blink Charging stations to an EV charge routing feature in Apple Maps (it's been on Google Maps for years now). This puts the Blink Charging network right at people's fingertips.  

I don't think customers will stay on a single charging network long-term, but will rather have multiple options, just like they do with gas stations today. In other words, Blink Charging's network isn't going to be an exclusive network for mapping apps, but rather will be part of a larger network. But having a mapping platform that you're integrated into will be key to reach the most customers. So if those apps grow and get more utilization, it will create a bigger pie for charger owners and I think that's good for Blink Charging long-term.

Finally, this is all for naught if EV sales don't increase significantly. Right now, EVs account for less than 5% of auto sales, but if that grows to a double-digit percentage in the next decade, there will be a huge tailwind behind Blink Charging and charging infrastructure more broadly. 

Is Blink Charging a buy today? 

Blink Charging has a crazy valuation by almost any measure. What I worry about most is that it's not equipped to grow the installed base of chargers quickly enough for investors and their utilization won't rise particularly fast given the slow rate of EV sales. 

This is a great story of a stock but I think the narrative is better than reality at present. I'm not crazy enough to short it, but this isn't a stock I would buy today, either.