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Electric vehicle (EV) stocks have dipped, as high inflation and interest rates have slowed the pace of EV adoption, and an industry-wide price war has pressured margins. Nevertheless, EVgo (EVGO) stands out as an innovative EV charging play, positioned for a strong upside ahead - particularly after industry leader Tesla (TSLA) famously dismantled its Supercharger team earlier this year.
On July 25, EVgo said it added top names from both Tesla and General Motors (GM) to the firm's top-level leadership, including Supercharger veterans Martin Sukup and Jeff Inhofer, alongside former General Motors EV executive Alex Keros. These moves enhance EVgo's profile and expertise as a leader in the public fast-charging network sector.
From a strategic standpoint, adding three of the top minds in the EV business could catalyze the development of next-generation charging technologies. Sukup is now the Executive Vice President of Engineering, while Inhofer is the Vice President of Electric Vehicle Supply Equipment Engineering, bringing a wealth of experience from their previous roles. Meanwhile, Keros will step in as Senior Vice President of Product starting in mid-August, leveraging his extensive experience from GM to steer EVgo's product strategy.
These key appointments add direction to EVGO at a time when the EV market is more unpredictable than ever. The penny stock is pulling back today after earnings, but investors with a longer time horizon and a healthy appetite for volatility may want to consider investing in EVGO around current levels for its upside potential.
About EVGO Stock
Founded in 2010 and based in Los Angeles, EVgo (EVGO) is one of the leading electric fast vehicle charging networks in the United States, with more than 1,000 fast charging stations in 35 states. With a market cap of $1.16 billion, the company is also partnered with Pilot and Flying J locations on charging stalls through the EVgo eXtend network, with installation, operation, and maintenance managed by EVgo. The company has more than doubled its registered customer accounts to over 1 million, highlighting the increasing demand for public charging infrastructure.
Like many EV startups, the stock is down substantially from its 2021 highs. EVGO shares are just about flat on a YTD basis, with the stock backpedaling more than 7% today as investors react to its latest earnings report.
That said, EVGO stock is up an impressive 78% since May 13, when CEO Badar Khan purchased 125,000 shares of the stock at $2.00 each.
This $250,000 purchase by such a well-placed member of the executive team - notably, the only insider buy on record for EVGO - so far seems to be playing out as a bullish indicator for the stock, signaling a strong vote of confidence by Khan in the company's future prospects.
EVgo Slips After Q2 Earnings
EVgo is trading lower today, despite beating Q2 revenue and bottom-line estimates. Revenue ramped up 31.6% to a stronger-than-forecast $66.6 million, led by a 146% increase in charging network revenue to $36.4 million.
Adjusted gross profits were $17.7 million, with an adjusted EBITDA loss of $8 million, or $0.10 per share. That was wider than EVGO's year-ago loss of $0.08 per share, but narrower than the consensus estimate.
Net cash from operating activities arrived at $7.6 million, a marked improvement from outflows in the year-ago quarter.
Network throughput rose to 66 GWh, up 164% to mark the sixth straight quarter of triple-digit annual growth, while network utilization rose to 20% from 11% on a year over year basis.
“We are seeing continual record demand in the industry, which we are well situated to capture given our position as an owner operator and as evidenced by the tremendous growth in throughput and new customer accounts,” said Khan in statements accompanying the Q2 numbers.
Looking ahead, EVGO raised the midpoint of its full-year revenue guidance by $10 million to a range between $240 million and $270 million, with an adjusted EBITDA loss expected between $44 million and $34 million.
Key Partners for EVGO
Some of the biggest players in the automotive space continue to partner with EVgo to grow their position in the EV charging niche. Recently, Toyota Motor (TM) North America announced that Baldwin Park and Sacramento, California, will be the first to receive EVgo DC fast chargers, and operations are expected to begin next year. This partnership underscores EVgo's commitment to expanding high-power fast charging capabilities.
Additionally, EVgo's Autocharge+ feature, now available with more than 50 EV models, enhances the customer experience significantly. Partnerships with rideshare giants like Uber (UBER) and Lyft (LYFT), which are aiming for all-electric fleets by 2040, could add considerably to the company's top-line growth.
What Are Analysts' Expectations for EVGO Stock?
On balance, analysts are somewhat more bullish on EVGO than they were a few months ago. Currently, Wall Street has assigned a consensus rating of "Moderate Buy," based on 12 analysts in coverage. Of these, 5 have a "Strong Buy" rating, 1 has a "Moderate Buy," and 6 have a "Hold" rating.
The average 12-month price target for EVGO is $4.59, reflecting expected upside potential of about 28% from current levels. While this EV penny stock carries some risk, as today's volatile price action suggests, investors with the proper appetite for that risk may want to consider EVgo for its strong market position and long-term growth potential.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
