Why EVgo Inc Is Bullish at the Moment
EVgo Inc (NASDAQ:EVGO) has been one of the biggest stock market winners in 2022, rising by 25% in the first quarter alone.
EVgo stock has been outpacing its peers and the broader stock market. As of this writing, the stock is up by:
- 10% over the last month
- 48% over the last three months
- 61% over the last six months
- 31% year-to-date
- Seven percent year-over-year
The outlook for EVgo stock is solid, with Wall Street analysts providing an average 12-month share-price target of $14.20 and a high estimate of $22.00. This points to potential gains of approximately 10% and 70%, respectively.
Why the bullishness for EVgo Inc?
The number of electric vehicles (EVs) on the road is growing every second. Approximately 142,000 EVs were sold in the U.S. during the fourth quarter of 2021, and 475,000 were sold in full-year 2021. (Source: “EVgo Inc. Reports Fourth Quarter and Full-Year 2021 Results,” EVgo Inc, March 23, 2022.)
Moreover, after saying EVs are the future of the car industry, President Joe Biden unveiled a plan to provide $5.0 billion to state governments to fund EV chargers over the next five years.
That’s where EVgo fits in. The company owns and operates a network of public fast chargers for EVS in a number of locations. In fact, it has the largest public fast-charging network for EVs in the U.S. (Source: “European Investors Meetings — April 2022,” EVgo Inc, April 3, 2022.)
Whereas Level 2 EV charging units—which work best for houses, apartment buildings, and workplaces—can take five to six hours to charge EVs, fast-charging units—which are designed for public locations—take only 15 to 45 minutes.
EVgo Inc’s chargers can be found in an increasing number of areas. To date, more than 130 million Americans, including over 80% of Californians, live within 10 miles of an EVgo fast charger. With more than 850 fast-charging stations and over 340,000 customer accounts, EVgo serves more than 60 metro markets in 35 U.S. states.
EVgo Is Expanding Its Operations
EVgo Inc expects to triple in size over the next five years.
In February, EVgo announced that it was selected as the preferred EV charging partner of Subaru of America, Inc. (Source: “Subaru Selects EVgo as Preferred EV Charging Partner Following Announcement of First All-Electric Vehicle,” EVgo Inc, February 8, 2022.)
The news came shortly after Subaru unveiled its first-ever zero-emission vehicle, the 2023 “Subaru Solterra” SUV.
In March, EVgo and Wawa, Inc., a regional convenience store retailer, announced the opening of the first EVgo public fast-charging station at a “Wawa” store in Pennsylvania. (Source: “EVgo Energizes New Station at Wawa in Philadelphia Bringing EVgo Chargers to 6 Stores Across the Convenience Retailer’s Chain,” EVgo Inc, March 10, 2022.)
The station in Pennsylvania marks EVgo’s sixth charging site at a Wawa location.
In early April, EVgo said it will be working with JPMorgan Chase & Co (NYSE:JPM) to roll out EV charging stations at 50 of the bank’s U.S. branches, starting this summer. (Source: “Chase to Pilot Fast Electric Vehicle Charging Stations at Select U.S. Branches,” EVgo Inc, April 7, 2022.)
The fast chargers will be installed at “Chase” branches in California, Illinois, Indiana, New York, Oregon, and Pennsylvania.
Over the last number of months, EVgo has also expanded its partnership with Uber Technologies Inc (NYSE:UBER) and has been named the preferred charging network provider of Toyota Motor Corp (NYSE:TM).
EVgo Inc Reports Q4 Revenue Beat
Solid market penetration and a growing customer base have helped EVgo increase its revenue, network throughput, and number of customer accounts.
For the fourth quarter ended December 31, 2021, EVgo Inc announced that its revenue increased by 70% year-over-year and 15% sequentially to $7.1 million. (Source: EVgo Inc, March 23, 2022, op. cit.)
Its full-year 2021 revenue went up by 52% year-over-year to $22.2 million. This was at the high end of guidance and above Wall Street analysts’ calls for full-year revenue of $21.0 million.
EVgo Inc’s total customer accounts grew in 2021 by 47% year-over-year to approximately 340,000.
Meanwhile, the company’s operational EV charging stall count expanded to 1,676 in 2021. EVgo ended the year with 1,903 stalls either in operation or under construction.
On top of that, EVgo’s active engineering and development pipeline grew to approximately 3,100 stalls in full-year 2021, up from approximately 2,500 at the end of the third quarter.
By the end of 2022, EVgo Inc expects to have between 3,000 and 3,300 direct current (DC) fast-charging stalls that are either operational or under construction.
“As demonstrated by our recent partnership announcements, we continue to see substantial interest in EVgo’s market-leading solutions and are prioritizing the rapid expansion of our best-in-class charging network and services,” said Olga Shevorenkova, EVgo Inc’s CFO.
“Such a market opportunity necessitates the investments we are making…with a continued focus on prudent capital allocation practices and long-term value creation of the business.”
Looking ahead, EVgo Inc expects to report sales of about $52.0 million for 2022. That represents year-over-year sales growth of more than 135%. It’s a little shy of the $53.2 million in sales that analysts have projected, but close enough.
As mentioned earlier, EVgo Inc has the biggest public fast-charging network for EVs in the U.S.
The company finished 2021 strong, with momentum in revenue growth, customer acquisition, and charging station development. EVgo Inc’s fourth-quarter and full-year net loss rose, but EVgo is a new company, so its sales matter more than its earnings at this point.
Thanks to increases in the numbers of its charging stations and customer accounts, the company should continue to experience significant revenue growth over the next few years. And that should lead EVgo stock to keep rising in value.