Shares of Blink Charging (BLNK 1.04%) rose 15.6% in January, according to data provided by S&P Global Market Intelligence. It was an eventful month for Blink, which sold more shares to the public during January. Still, even a dilutive share sale wasn't enough to keep this EV stock from soaring amid optimism over renewable energy and electric vehicles under the new Democratic administration.
As a company that produces electric vehicle charging stations, Blink initially got a boost after the Senate runoff elections in Georgia went for the Democrats, giving Democrats control of the Senate. That will likely be a plus for EV and renewable policies over the next two years.
Immediately thereafter, Blink raised $221.4 million in cash via a stock sale at $41 per share. Blink said it would use the proceeds to "fund EV charging station deployment and finance the costs of acquiring competitive and complementary businesses, products and technologies as a part of its growth strategy, and for working capital and general corporate purposes."
One would think that a capital raise, as well as the mid-month sale of $22.1 million of stock by Blink's chairman and CEO Michael Farkas, would cause a large drop in the stock. However, that didn't happen.
Instead, Blink's shares skyrocketed in late January, after President Joe Biden called for transitioning the federal government's vehicle fleet to electric vehicles. In an executive order, Biden directed "federal agencies to procure carbon pollution-free electricity and clean, zero-emission vehicles to create good-paying, union jobs and stimulate clean energy industries."
Finally, Blink Charging had also been heavily shorted after a massive run-up during 2020. Retail investors on Reddit began targeting heavily shorted stocks during January in order to try to fuel short squeezes. As of Jan. 15, over a quarter of Blink's float was sold short. As shorts covered, the stock climbed further.
Over the past year, Blink's stock is up a ridiculous 2,132%. Yes, you read that right. But after the recent run, is all the good news priced in to this EV-related stock?
My colleague Jason Hall thinks Blink's rise has more to do with hype over EVs than any fundamentals. After all, the stock's $2.2 billion market cap is more than 336 times Blink's sales. Meanwhile, Hall points out that Blink didn't spend a dime on research and development last year, and that there are some questionable related-party relationships between Blink and Farkas' other businesses.
For all these reasons -- plus the fact that Farkas sold tens of millions in stock in January -- I'd be pretty careful with Blink's stock, despite the bright prospects for electric vehicles.