EVGO Stock Revs Up on Delta Electronics Deal

  • EVgo (EVGO) signed a supply deal with Delta Electronics for its fast EV chargers.
  • The company also has a deal to put its chargers in Pilot Flying J truck stops.
  • EVGO stock's big problem is its rich valuation.
EVGO stock - EVGO Stock Revs Up on Delta Electronics Deal

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EVgo (NASDAQ:EVGO), an electric car charging network, jumped 15% after Delta Electronics agreed to support installation of its network.

EVgo says the deal will mitigate supply chain risks and let it reach its fast-charging growth targets. Delta will supply EVgo with 1,000 fast chargers that work at 350 kilowatts, supporting its recently-announced project with General Motors (NYSE:GM) and truck stop operator Pilot, as well as fleet chargers and EVgo’s own network.

Pilot is privately held, but Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) holds a large stake. Delta Electronics is based in Taiwan. EVGO stock currently trades around $11 per share with a market cap of $2.9 billion.

This Is Big

Electric vehicle sales have been held back by “range anxiety,” or consumer fears they won’t be able to find charging equipment on long trips. Pilot Flying J has more than 750 locations, most with restaurants and WiFi, and even showers for truckers. It can take a half-hour to fully recharge a high-capacity electric, compared to less than 5 minutes to get gasoline.

TipRanks recently listed seven EVgo analysts, only four of which suggest buying it, with a price target just 5.5% above its Aug. 11 opening price.

EVgo had revenue of $22 million last year, but recently announced second-quarter earnings on Aug. 9 of $4.5 million, or 6 cents per share, on sales of about $9 million. The results were better than expected, sending the shares up almost 12%.

What Happens Next for EVGO Stock?

EVgo now has a clear runway to expand its network from 850 locations, mostly near the coasts, into rural areas where it has not been active. Pilot Flying J has stores in all the lower 48 states.

The problem is EVGO stock is already richly valued, selling for more than 100 times its annual revenue. That revenue will grow, and so will profits, but 2022 has taken down many fast-growing stocks based on valuation concerns.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.


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