EVGo (EVGO 1.71%) stock tumbled 27% through 10:05 a.m. ET Tuesday after the operator of charging stations for electric vehicles announced last night that EVgo Holdings, LLC, will sell at least 23 million new shares of common stock (and perhaps as many as 26.5 million) in a secondary offering. (We further learned this morning that the shares will be priced at $5 each).
And here's the most important bit of news: EVgo Holdings and EVgo are not the same thing.
NASDAQ: EVGO
Key Data Points
Insider sales
To its credit, EVgo made this clear in a press release, noting, "EVgo Holdings, LLC [is] an affiliate of LS Power Equity Partners IV, L.P.," a shareholder of EVgo proper -- so for clarity, from here on I'll be referring to EVgo Holdings as "the insider."
So basically, what we have here is an insider selling a big chunk of EVgo shares. The insider will get all the money from this sale (somewhere between $115 million and $132 million before fees). And EVgo will get none of it.
Is EVgo stock a sell?
This revelation seems to have shocked and appalled EVgo investors today -- and no wonder. Boiled down to its essence, we've just been told that someone who owns roughly 25% of EVgo's shares outstanding is dumping them on the market, and at a price 21% below where EVgo stock closed at last night.
Everyone else will be left holding shares in an EV charging stock that's never earned a profit, and that most analysts think will still be losing money a decade from now... while one of the biggest shareholders of this EV charging stock bails out at a big discount to the current share price.
Seems to me that's a strong hint that it's time to throw in the towel and sell.
