What happened
Shares of electric car charging company Blink Charging (BLNK 11.26%) rocketed to close 17.1% higher on Monday.
You can thank an analyst at H.C. Wainwright for that.
So what
Shares of Blink got upgraded to buy with a $50 price target at investment banker H.C. Wainwright this morning, as described in a note covered on StreetInsider.com. As analyst Sameer Joshi explained, Blink is benefiting from "several positive developments," not least the passage of President Biden's $1 trillion infrastructure bill, which includes "approximately $7.5B" in funding for companies building out electric vehicle (EV) charging networks in the U.S.
Image source: Getty Images.
Not only that, but the administration is also advocating passage of a "$7,500 incentive per EV ... tax refund," wrote Joshi, plus an "additional benefit of $4,500 for EVs produced in U.S. factories with union labor" and an additional tax benefit of "$500 per EV that use batteries produced in the U.S."
Now what
Add it all up, and that's as much as $12,500 in government incentives to encourage Americans to buy electric cars ... and then charge those cars at car charging stations such as the ones Blink Charging is building. "This dual action of incentivizing EVs and the EV infrastructure," says Joshi, "should help overcome drivers' 'range anxiety' that has thus far hindered EV growth."
It would also, one imagines, overcome some checkbook anxiety about the high cost of EVs -- by having the government foot the bill for much of the purchase cost. There's just one problem with all the above (well, one problem in addition to the one that all of this money ultimately has to come from the same taxpayers who are being expected to buy the cars):
Turns out, the $12,500 in tax incentives that the analyst is pointing to aren't included in the $1 trillion infrastructure bill at all, but rather in the Build Back Better bill -- the one that was supposed to be linked to the infrastructure bill but has since been decoupled from it. That decoupling has hurt its chances of ever getting passed.
Long story short, the buy thesis hangs on the tenuous hope that a cash-strapped government will soon volunteer to pay $12,500 to help Americans buy electric cars. Suffice it to say, that's a very thin reed with which to support the idea of buying an unprofitable car charging stock that trades for 149 times sales.
