Many electric-vehicle (EV) start-ups have gone public over the past year, typically by merging with a special purpose acquisition company (SPAC). One way to play the ongoing rise in EV adoption is to invest in EV charging infrastructure. That strategy is less of a bet on a specific manufacturer, but rather a way to play the boom in infrastructure investments that governments, municipalities, and companies will be making in the years and decades ahead.

Two of the most prominent EV charging stocks that have emerged are Blink Charging (NASDAQ:BLNK) and ChargePoint, which is still in the process of closing its deal with Switchback Energy (NYSE:SBE). Both stocks have soared in recent months, but remember that, as always, individual share prices don't paint the full picture in terms of overall valuation.

Here's why ChargePoint is worth a spot in your portfolio, but you should pass on Blink.

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ChargePoint is the market leader with a substantial revenue base

ChargePoint is already the No. 1 charging network in North America by a significant margin. The company boasts a whopping 73% market share of networked Level 2 charging, compared to the 8% share that Blink commands, according to the Alternative Fuels Data Center (AFDC), which is part of the U.S. Department of Energy. These figures refer to the share of installed Level 2 chargers, excluding residential charging ports, and don't reflect driver utilization.

Co-workers congregating around ChargePoint stations at work

Image source: ChargePoint.

It should come as no surprise that each company's revenue base is drastically different. ChargePoint generated $147 million in revenue in 2019 but expects its top line to dip to $135 million in 2020 due to impacts from the COVID-19 pandemic. Revenue should rebound as world economies recover from the crisis. In contrast, Blink reported just $2.8 million in revenue for 2019 and had generated $3.8 million in sales during the first three quarters of 2020.

Blink CFO Michael Rama noted on the earnings call that the timing of some orders in the third quarter were being pushed into the fourth quarter, but Blink's revenue base is still tiny compared to ChargePoint's.

Both companies still lose money, which is unsurprising. But ChargePoint estimates that the cash that it will raise from the SPAC merger will be sufficient to fund operations until it can become cash flow positive. Blink did a secondary offering just last month selling 5.4 million shares and raising $221.6 million in net proceeds. That deal was extremely dilutive to existing shareholders: There were only 35.95 million shares outstanding prior to the offering, translating into 15% dilution. 

In other news

It's also worth noting that Blink CEO Michael Farkas has faced allegations of participating in a pump-and-dump scheme regarding Skyway Communications in the past (he has denied wrongdoing), according to Bloomberg.

Farkas participated in the aforementioned secondary offering, selling 540,000 shares for $22.1 million, according to regulatory filings. The chief executive still holds 7.3 million shares, split between direct holdings and various other entities that he beneficially owns or controls.

Man walking by Blink chargers

Image source: Blink Charging.

Separately, ChargePoint is facing a delay with its merger. Switchback Energy held its special meeting of shareholders earlier this month to vote on the proposed deal. Not enough people showed up.

Only about 45% of shareholders who were eligible to vote (shareholders of record as of Dec. 16) submitted proxies to vote, falling short of the 50% majority needed to move froward. To be clear, of the votes submitted, an overwhelming 99.9% of shares were voted in favor of the deal.

Retail investors are typically unaccustomed to voting on corporate governance matters, often leaving that task to institutions. In this case, it appears that many retail investors who may have already sold their shares have not voted, and Switchback Energy is urging them to do so.

Different models

Perhaps most importantly, investors should recognize that Blink and ChargePoint use dramatically different business models. Both companies have a variety of offerings, so here's just a summary of the primary model utilized.

ChargePoint customers, known as site hosts, buy hardware from the company and pay for the installation, which allows the company to use a relatively capital-light approach. ChargePoint then charges a recurring subscription fee for its networked software using the popular software-as-a-service (SaaS) model, with a 100% attach rate to hardware sales.

The software allows the customer, typically a local business or municipality, to monitor and manage the charging stations. For example, a company might install a ChargePoint station to be exclusively used by its employees. Then there are ongoing services like warranties for post-purchase support.

Many EVs charging in front of an office building

Image source: ChargePoint.

This cannot be stressed enough, but ChargePoint does not monetize the actual charging service or energy utilization at all. The site host determines the pricing levels and retains 100% of all fees, but many site hosts simply offer charging for free as a way to attract customers to their own businesses or as a benefit for employees, for instance.

Blink's model is quite different. The company offers a turnkey solution where it will cover the upfront installation of the charging hardware and manage all aspects of operation and administration, but then relies on a revenue-sharing model to recoup those investments over time. This presents a major hurdle for EV drivers. Since Blink needs to monetize energy sales, the prices to charge are relatively high. In some cases, charging an EV fully at a Blink station can cost more than the price to fill up a car with gas, negating one of the biggest benefits of owning an EV in the first place.

In order to encourage EV adoption, Level 2 charging should be cheap (or free, preferably) and ubiquitous. EV fast charging will likely always cost money due to demand charges imposed by electric utility companies, while Level 2 chargers don't typically use enough energy for those fees to kick in.

ChargePoint is already the dominant leader in EV charging in North America, thanks to its first-mover advantage and clever model that doesn't rely on energy monetization. By selling primarily to the enterprise -- 62% of Fortune 50 companies have ChargePoint stations installed on their corporate campuses, with many aggressively expanding deployments -- ChargePoint is the EV stock to own.

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.