We are almost certainly watching the largest revolution in the automotive industry since Henry Ford's assembly line churned out its first vehicle. And while it may be difficult to understand how fast electric vehicles (EVs), and eventually autonomous vehicles, will take over the road -- as many of us have yet to even drive one -- it's these rapid developments that offer investors the opportunity of a lifetime.
Here's how Blink Charging (BLNK 1.05%) can revolutionize your portfolio as we witness the rapid change across the global automotive landscape. After a nearly 40% decline over the past year, this could be a solid buying opportunity for long-term investors willing to accept some risk.
First things first
It's possible you haven't heard of Blink Charging, so let's cover some company basics. Blink Charging is a leading operator, owner, and provider of electric vehicle charging equipment and services, and drives revenue in a number of ways. It has a growing member base of over 180,000 and a network of more than 23,000 EV charging stations across the U.S., Europe, and Middle East.
The company offers a Blink-owned turnkey business model, offering to incur the costs of the equipment and installation, and provides the station to its network -- generating recurring revenue. Blink Charging also offers a hybrid business model where it still incurs the costs of equipment. However, the property partner takes on the installation costs, while the station is still offered to the Blink Network. In that hybrid scenario, the company shares more of the EV charging revenues with the property partner, after deducting fees.
Also available are host-owned and Blink-as-a-service business models, and the company even operates a ride-sharing program through its wholly owned subsidiary, BlueLA Rideshare, enabling customers to rent EVs with a subscription service.
To put it simply, Blink Charging is well positioned to thrive as more EVs take over the roads, which brings us to the next important point.
Follow the megatrends
If you follow automakers, the trend is pretty clear: Almost all, if not all, have a serious commitment to electrifying their vehicle lineup over the coming decade. Often these commitments come with a price tag in the billions of dollars. In fact, General Motors says it will produce only electric vehicles by 2035, and crosstown rival Ford believes all of its vehicles sold in Europe will be electric even sooner, by 2030.
The wave of EVs has already begun, and EV sales have steadily climbed by a staggering 40% annually since 2016. Furthermore, the number of EVs is projected to spike from under two million units in 2020 to more than 26 million in 2030.
As the megatrend toward electric vehicles, and eventually autonomous vehicles, continues to accelerate, it also means one additional thing is true: The electric charging infrastructure must expand proportionally. That's fantastic news for companies such as Blink Charging, and its stock could turn into a long-term home run.
With opportunity comes risk
While this might sound like a no-brainer investment -- and to be sure, it's a tantalizing opportunity -- there are risks for investors to understand as well.
The risks are fairly straightforward and predictable. With immense and rapid growth comes equally high costs. The company has reported consistent net losses, and those losses are expected to continue in the near term. Its long-term ability to deliver jaw-dropping gains to investors' portfolios also depends on EVs reaching mass adoption, preferably sooner rather than later.
Perhaps the largest risk of all: Blink Charging operates in a highly competitive EV charging services industry, and it's an industry that's likely to get more crowded as more companies realize the massive opportunity in surging EV sales and the need for charging infrastructure. Furthermore, some companies could have more financial resources, and the barriers of entry to this industry will likely remain fairly low.
Time to buy the dip?
With a near-40% decline over the past year, is now the time to buy into the EV revolution and increasing need for charging services? One key factor for Blink Charging to topple the competition will be its focus on strategic and often long-term agreements -- agreements that include some location exclusivity -- with property partners across high-traffic destinations such as airports, car dealers, medical locations, and hotels, among many more.
Blink Charging's management team will have to excel at expanding its turnkey and hybrid infrastructure models, constantly improve customer satisfaction, invest in technology innovations to differentiate it from the competition, and slowly drive toward profitability.
There are many risks facing the company, but one thing is for sure: EVs are taking over the roads, and it's going to take a lot more charging infrastructure to reach mass adoption in the coming decades. Blink Charging is well positioned for the rise in EVs, and if it executes on growth strategies, now will be a solid time for investors to start a position.