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Why Blink Charging Dropped 12% Today

By Howard Smith - Jan 4, 2021 at 4:00PM

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The EV charging station owner and operator is giving back only some of its recent gains.

What happened

Shares of owner and operator of electric-vehicle (EV) charging infrastructure Blink Charging ( BLNK -7.00% ) 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.

So what 

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. 

Cars near a Blink EV charger in a parking lot

Image source: Blink Charging.

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

Now what 

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.

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.

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Stocks Mentioned

Blink Charging Co. Stock Quote
Blink Charging Co.
BLNK
$35.74 (-7.00%) $-2.69

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