Blink Charging Co., A Short Squeeze In The Making

Blink Charging Co., The New Focus Of The Market

Blink Charging Co. NASDAQ: BLNK is quickly becoming a new focus for the market. Not only are investors seeking investment opportunities in EV stocks other than OEM manufacturers but Blink Charging Co. and stocks like it are getting a boost from infrastructure legislation. While we still have a ways to go before infrastructure legislation becomes law and actually has an impact on the business, some form of legislation is sure to pass and include aid for the EV industry. Getting back to Blink Charging Co., the Q3 results are a little mixed in terms of the analysts' expectations but prove definitively the high and rising demand for electric vehicle infrastructure like Blink Charging Co. charging stations.

Blink Charging Co. Falls On Mixed Results

Blink Charging Co. had a phenomenal quarter in terms of business but growing pains cut into the bottom line and have shares moving lower in early action. The company reported $4.36 million in consolidated revenue for a gain of 177% over the last year and this is no easy comp. Blink Charging Co. posted a 120% increase in revenue last year during the second quarter and that was followed up by several quarters of robust growth in the interim. The revenue also beat the consensus by 6600 basis points which is a very significant metric given the fact business has been so strong. Oddly enough, the analyst consensus for revenue and earnings has been trending lower but we see that trend changing very soon.

The report reveals that revenue strength is driven by both expanded capacity for charging as well as increased use of charging stations. The number of commercial Blink-owned stations rose by 46% YoY, the revenue from stations increased by 572%, and the net number of new units deployed In the quarter increased by 758%. Looking forward, we see this pace of expansion continuing and for revenue gains to continue at a robust pace as well.

Moving down the report, the details did get a little murkier in that the Q3 GAAP loss of -$0.32 missed the consensus estimate by $0.16 and more than doubled from last year. The company says the wider loss is due to increased compensation expense and SG&A which we read as the cost of growth. Looking forward, we will want to see this loss narrow in tandem with revenue growth as the company realizes the benefits of scale. 

Blink Charging Co Is A Meme Stock In The Making

The analysts are generally bullish on Blink Charging Co but there has been very little chatter over the past three months and so far, none since the release of the 2Q earnings report. That is contrasted by a very high 34% short interest that we see as a possible catalyst for higher prices. If nothing else, Blink Charging Co is a target for the social media crowd and could very easily become a meme stock. The 34% short interest combined with an influx of retail money could easily send this stock back up to its high near $55 if not break it out to new highs.

The Technical Outlook: Blink Charging Co Is In A Long-Term Uptrend

The weekly chart of Blink Charging Co price action is the more interesting to us. This chart shows a stock in an uptrend and about to move higher following a correction. The indicators are consistent with support at the $30.50 level and suggest a resumption of the uptrend is imminent. Assuming that support continues to hold, we see Blink moving sideways and then higher, possibly sharply higher, once the short covering begins. There is a chance however that short selling will weigh heavily on the stock in the near term and take it below support at $30.50. In that scenario, price action could move down to the $20 or even the $10 level. If it did, we'd be interested buyers.