EVgo (NASDAQ:EVGO) stock is sinking 10% today. The company, which owns and operates electric-vehicle chargers, is not yet profitable, and many investors continue to sell the stocks of unprofitable tech companies.
Yet EVgo is growing rapidly, the electric-vehicle revolution is well underway and looks poised to accelerate, and EVgo has made multiple partnership deals that should be extremely lucrative in the not-too-distant future. Therefore, I expect EVgo’s shares to rally over the next six months, and I recommend that long-term investors buy EVGO stock.
In the fourth quarter, EVgo’s revenue jumped 52% year-over-year to $22.2 million, while its gross profit, excluding certain items, jumped to $5.2 million in all of 2021, up from just $500,000 in 2020. So the company’s sales and profitability are zooming higher. What’s more, EVgo finished 2021 with roughly 340,000 customers, up from about 231,000 at the end of 2020. Finally, the combined power of all of the company’s chargers soared 68% YOY.
During EVgo’s fourth-quarter earnings conference call, its CEO, Cathy Zoi, listed a number of statistics that show the tremendous speed of the EV revolution. For example, the CEO noted that “In 2021 alone, the market share of electric vehicles more than doubled, along with U.S. driver purchases of EVs,” while “Auto manufacturers are planning to introduce approximately 50 new EV models just over the next 24 months, including the arrival of EVs in segments like SUVs and pick-up trucks that will unlock new demographic frontiers in EV adoption,” Zoi added, correctly. I believe, that the recent, steep increase in gasoline prices should cause the EV revolution to speed up even more.
And very importantly, as I’ve noted in the past, EVgo’s partnerships leave it very well-positioned to be a leader in the U.S. EV charging market. EVgo has a partnership with General Motors (NYSE:GM), which is reporting very strong demand for a number of its upcoming EVs, including the Cadillac Lyriq, the Chevrolet Silverado, and the Hummer. The EV charger owner is also partnering with Toyota (NYSE:TM) and Subaru. Given those two companies’ strength in the U.S. market, there should be very strong, if not huge, demand for their EVs. Finally, EVgo is partnering with Uber (NYSE:UBER), which is encouraging its drivers to use EVs. As a result, Uber drivers should have a great deal of demand for EV chargers in the coming years.
Trading with a market capitalization of just $3.2 billion, EVGO stock is not coming close to reflecting the company’s huge opportunities.