What happened
Shares of electric vehicle charging station stocks ChargePoint Holdings (CHPT 6.73%), Blink Charging (BLNK 2.08%), and Volta (VLTA) were plunging on Monday, down 6%, 7.5%, and 6.5%, respectively, as of 3:39 p.m. ET.
There wasn't any material news from any of these companies today, but the entire technology, clean energy, and electric vehicle sectors were down much more than the market today. That likely has to do with renewed anxiety over the path of interest rates, which is dependent on inflation, after a big bounce in these "risky" stocks over the past month and a half.
So what
On Monday, the yield on the 10-year Treasury Bond rose above 3% for the first time in over a month, after falling from a high around 3.48% in June to a near-term low of 2.6% in July.
When long-term yields rise on fears over inflation being stickier over the long term, that hurts growth stocks, which have the bulk of their earnings, and therefore, their value, well out into the future. Considering this, it's no wonder these EV charging stocks are falling today.
Each of these three are currently bearing significant expenses to build out their charging stations nationwide, with a payback that will occur over many years. Over the past 12 months, ChargePoint lost $304 million, Blink lost $72 million, and Volta lost $276 million on their bottom lines, respectively.
Each of these stocks had rallied over the past month, culminating in the passage of the Inflation Reduction Act, which provides incentives for consumers looking to purchase electric vehicles, as well as tax credits for companies that build green energy projects. While it's uncertain how that would affect these three companies specifically, the bill's passage is likely a good thing for EV charging companies in general.
However, it appears investors are now "selling the news" after the bill's passage, with each stock down materially from that high point over the past two weeks.
Now what
For those looking to make a bet on the future growth of EVs, these three companies could be a good place to look. However, keep in mind that they are risky bets in this environment, so long as they are losing money. ChargePoint is down 27% over the past year, Blink is down 23%, and Volta, the smallest, is down a whopping 78%.
ChargePoint is the largest of the three companies, with a $4.8 billion market cap and a charging station base of more than 188,000 charging stations spanning North America, Central America, and Europe. Blink is also at some scale in the same geographies, but with a market cap just over $1 billion and 51,000 installed charging stations as of the second quarter.
Volta is the smallest of the three, with a market cap of just $341 million and 2,950 charging stalls, predominantly in the U.S. Volta also attaches large two-sided screens to its stations that run advertising, with close to 5,500 screens attached to its charging ports.
In theory, I like the business model of installing charging ports and then collecting recurring software and advertising revenue going forward. However, each of these companies has significant growth priced into their stock prices, and they will need capital to continue building out their networks. They continue to face a tough near-term environment that will require a trade-off between growth and capital preservation, since they are currently burning cash to install ports and grow.
As is the case with many money-losing growth stocks, these remain highly sensitive to inflation and the path of interest rates, both to the upside and downside. With investors nervous about the upcoming weekend's meeting of Fed officials in Jackson Hole, Wyoming, it's no wonder they are selling off today.
