The electric vehicle (EV) market is booming in 2023, accounting for 19.1% of total car sales with global sales expected to reach 14.5 million units by the end of the year. Tesla (NASDAQ:TSLA) and the general rise of EVs have been fed by the growing electric vehicle charging infrastructure across the United States and elsewhere.
However, not all segments of the EV industry are equally profitable or sustainable. In particular, the EV charging sector faces several challenges that could undermine the long-term viability of some players, such as significant competition and cash-flow issues.
Given these challenges, some EV charging stocks are ticking time bombs that investors should dump this September. Below are three such EV charging stocks to sell.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) is one of the largest EV charging networks in the United States. Currently, there are more than 66,478 charging stations across the country, with an impressive 50,167 belonging to the Blink Network and the remainder sold to private networks or residential areas.
However, the company has several red flags that investors should be aware of. First of all, Blink Charging is unprofitable and cash-burning. In its latest quarterly report, the company reported a net loss of $41.5 million on revenue of $32.8 million. Despite dramatic gains in YoY revenue growth, operating costs have ballooned out of proportion.
Moreover, Blink Charging has a history of questionable accounting practices and governance issues, which have attracted scrutiny from regulators and short sellers. In late August, the EV charging platform received a subpoena from the U.S. Securities & Exchange Commission (SEC) requesting the documents and other materials “relating to various subjects, including executive departures, related-party transactions, number of EV charging stations, and other discrete disclosure matters.”
No matter what the SEC investigation ultimately concludes, investors should definitely try sell their BLNK shares before it’s too late. With valuation already stretched, there is little upside to expect from here.
EVgo Services (EVG)
EVgo Services (NASDAQ:EVGO) is another major EV charging network with around 3,200 charging stations “in operation or under construction” by the end of the second quarter of 2023 nationwide.
Nonetheless, EVgo is facing a profitability and cash-burn issue similar to its competitor, Blink Charging. While revenue and gross profit have definitely improved YoY based on demand for EVgo’s products and services, quarterly net income declined 226.7% to a net loss of $21.5 million.
Of course, the company expects to incur losses for the foreseeable future as it invests heavily in expanding its network and developing new technologies. The company could also move to raise capital again to fund future operations as it did in May this year with a $125 million.
These kinds of capital raises are not out of the norm for companies growing at this pace, but could still be dilutive to current shareholders. However, markets have become generally punishing of high growth companies with no clear path to profitability. For these reasons, investors should steer clear of EVgo for now. For those who have invested, it’s definitely an EV charging stock to sell.
ChargePoint Holdings (CHPT)
ChargePoint Holdings (NYSE:CHPT) is one of the largest EV charging networks worldwide, with more than 225,000 charging ports across North America and Europe as of Jan. 31, 2023.
However, since its inception in 2007, the company has only been losing money and generating negative free cash flow. In their second quarter earnings print for this year, ChargePoint reported an enlarged net loss of $125.2 million on revenue of $150.5 million.
From a competition perspective, ChargePoint has a number of obstacles ahead of it. In particular, ChargePoint faces fierce competition from not only the entries above but also from the electric vehicle giant Tesla itself. These competitors have similar or lower costs, higher top-line growth, and stronger customer loyalty.
All in all, ChargePoint’s lagging growth and lack of profitability have resulted in astronomic valuation multiples, which could prove to be untenable in the current market. For this reason, it closes out my list of EV charging stocks to sell.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
