Shares of owner and operator of electric-vehicle (EV) charging infrastructure Blink Charging (BLNK -2.51%) dropped 12% today, as of 3:45 p.m. EST. Even with the drop, shares are still up almost 70% since the start of December.
The most recent news from the company has been positive, but on a bit of a correction day in the markets, highfliers like Blink Charging are taking a hit today.
Since the middle of December, Blink has announced several long-term exclusive agreements or additional product deployments with healthcare systems in Illinois and Pennsylvania. And most recently, it announced a new deal with EV truck and bus maker Lion Electric. Lion will soon be trading publicly after a merger with special purpose acquisition company Northern Genesis Acquisition.
Blink itself went public in early 2018 through a traditional initial public offering (IPO). Investor interest began to grow last year, and the stock has risen an astounding 1,900% since the start of 2020.
Those speculating in EV stocks are also adding money into ancillary businesses like charging networks. This has driven up the valuation of Blink, and the company now has a price-to-sales ratio of 234. That kind of valuation isn't sustainable, and either revenue will significantly grow as long-term investors expect, or the share price will come down significantly.
In this type of situation, investors should expect this type of volatility, and owners of the stock should hold these shares in the speculative portion of a portfolio.