EV charging stocks just can’t get any love from investors right now. There are a couple of reasons for that. Both could reverse in coming months.
Monday evening, EV charging equipment provider
Beam Global
(ticker: BEEM) reported better-than-expected results.
Sales came in at $17.8 million, up about 380% year over year and higher than the $13.5 million analysts had projected. Beam isn’t profitable yet, but the company reported a per-share loss of 32 cents, a little better than the 34-cent loss Wall Street expected.
Results look sold, especially sales numbers. The stock is down anyway. Shares are off 4.8% in late trading Tuesday, while the
S&P 500
and
Nasdaq Composite
are down 1% and 0.9%, respectively.
Tuesday’s trading action is a microcosm of what’s been going on in the EV charging space. Beam stock is off 46% over the past six months. Shares of
EVgo
(EVGO),
ChargePoint
(CHPT), and
Wallbox
(WBX) are down 38%, 43%, and 52%, respectively, over the same span.
Beam’s business is a little different than the other three, but all are involved in the EV charging ecosystem. Beam provides solar equipment to keep EV chargers off the grid, eliminating the need for digging trenches to hook up to the existing infrastructure. The other three make charging equipment and support the charging stations. Beam’s solar solution is more expensive in some instances, but cheaper in places such as New York City where it can take years to get permits, and digging a trench to lay electrical cables in the street can cost $2,000 a foot.
“It goes further than EV charging stocks,” says Beam CEO Desmond Wheatley. “Growth stocks in general have been, very, very difficult here.”
He has a point. The
iShares Russell 2000 Growth ETF
(IWO) is down about 1% over the past six months, about four percentage points worse than the
Dow Jones Industrial Average.
It isn’t a big difference, but growth stocks that don’t make money have been hit even harder than the average. The EV charging group falls into that category.
Growth falling out of favor is one factor. The nature of the shareholder base is another factor, says Wheatley. He’s seeing more retail investors in his stock. They typically have smaller positions and trade more frequently, introducing more volatility to a stock or group of stocks.
A growing fear that the EV revolution is stuck in neutral is yet another issue.
General Motors
(GM) EV sales fell in the second quarter compared with the first quarter.
Ford Motor
(F) recently backed off some of its EV growth goals and increased its expected EV loss for 2023.
“There is a perception of a lack of sales than a reality of lack of sales,” says Desmond. U.S. EV sales were a record in both the first and second quarters of 2022. Business trends look solid too. “Our backlog is very healthy,” he says, adding that the current backlog amounts to about two-quarters of sales and that his sales pipeline is four times the size of the backlog.
The EV charging companies will need to make money eventually. That might take some time. Wall Street projects positive earnings for the four EV charging stocks around 2026. Perception will likely turn faster than that. When it does, investors should get ready by knowing who can benefit from the shift.
Write to Al Root at [email protected]
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