Most investors didn't have Blink Charging (BLNK -0.59%) on their radar coming into 2020. The company is a relatively small network of electric vehicle chargers, and was losing money quarter after quarter. But that all changed last year.
The electric vehicle market got hot, and so did Blink Charging's stock. Heading into 2021, what does the company need to do to keep investors excited about this growth stock?
Growth, growth, and more growth
The key to Blink Charging's continued strong performance on the stock market will be growth. Network growth is the biggest thing the company has in its control, but improved utilization at charging stations will be important as well.
Growth doesn't just have to come in the form of organic growth via installing more chargers itself. The company could acquire other companies, especially with its highly valued stock. It recently did this by acquiring U-Go Stations and BlueLA Carsharing in Los Angeles to expand its network. Management has said it will continue this strategy in the future, scooping up smaller charging networks to build the large, high-value network that investors envision from Blink Charging.
Blink Charging is also starting to develop some partnerships with installation locations, like a Burger King franchisee in the northeastern U.S. These kinds of partnerships will drive installation growth -- but it could be automotive partnerships that give real viability to Blink Charging.
Partnerships will give Blink Charging viability
Tesla (TSLA 3.11%) has proven that building a large charging infrastructure is valuable to its customer base. But as over a dozen manufacturers roll out electric vehicle models in the next few years, we aren't going to see a dozen new charging networks. Manufacturers will want to give their customers access to a large, established charging network, and Blink Charging can fill that void.
If Blink Charging's strong run is going to continue, I think the company will need to partner with a few of the electric vehicle manufacturers introducing vehicles over the next few years. Rivian, Lucid Motors, and Fisker are just a few of the start-ups that could be interested in partnering with a charging network to give their customers charger access.
Can the run continue?
Any way you look at it, Blink Charging is already priced for perfection. Shares trade for a whopping 254 times revenue, and the company has generated just $4.5 million in revenue over the past year.
The company may be able to live up to expectations as its charger network grows, more EVs are sold, and utilization goes up. But management needs to execute flawlessly, and growth needs to pick up at a rapid pace. 2021 could be a wild ride for investors, no matter what happens.