Investing in EV charging stocks is like investing in any other emerging sector: It presents something of a Catch-22. On the one hand, the market is growing rapidly and is expected to continue doing so. Yet, as with growth sectors in general, there will be a lot EV charging stocks to sell, but a few champions will emerge.
We’re focusing on the prior here. These firms are destined to fail, necessarily, but they are waving red flags that investors would be wise to heed. The EV charging sector has started to solidify meaning there are a few clear leading firms in the space. It won’t be as easy for smaller firms to compete with them moving forward. That truth, and others, indicates that investors should beware these three EV charging stocks to sell.
Nuvve Holding (NVVE)
Nuvve Holding (NASDAQ:NVVE) is an EV charging stock representing a firm that offers what it calls vehicle-to-grid technology (V2G). It’s an interesting business model and a great place to start in understanding the company and its current issues.
V2G technology allows users to charge their vehicles using Nuvve’s chargers. However, it also allows users to send the power stored in their vehicle’s battery back into the grid at the same time. In theory, that means users can charge their vehicles at lower rates and sell battery power back when demand is higher. That said, the company doesn’t break out the metrics about such services so it’s difficult to accurately gauge what it looks like in practice.
While the concept is interesting, the financials are less so. Nuvve posted a net loss of $8 million in the second quarter. That’s 46% higher than its loss a year earlier. Revenue did increase by 63%, reaching $2.1 million. However, don’t let that entice you into purchasing NVVE shares because the company only has $11 million in liquidity which won’t go far given recent losses.
Charge Enterprises (CRGE)
Charge Enterprises (NASDAQ:CRGE) is sort of the opposite of Nuvve Holdings in regard to the red flags the firm is showing presently.
Its issues are top-line oriented rather than bottom-line. Charge Enterprises has seen its revenues contract contract which is the opposite of what has happened at Nuvve Holdings. Likewise, the two firms are experiencing different bottom-line issues. Charge Enterprises is controlling its costs and as a result, has seen bottom line losses narrow in both of those periods.
The company is unique in that it is diversified among two independent business segments. Outside of EV charging infrastructure, Charge Enterprises also provides telecommunications services like voice call connection and SMS service. Although Charge Enterprises made more than $340 million in sales in Q2, it was mostly telecommunications revenue. $283 million of the firm’s sales came from telecommunications and $57 million from EV infrastructure. Thus, it’s not a ‘true’ EV firm in reality. It is, in reality, a firm that is contracting at the moment.
Hypercharge Networks (HCNWF)
Hypercharge Networks (OTCMKTS:HCNWF) is actually headed in the right direction. Make no mistake about it, the company is in trouble and should probably be avoided. However, it has shown improvement and deserves recognition for that at least.
Let’s start there. Hypercharge Networks’ revenues increased dramatically during the most recent quarter rising from $68k to $501k. That’s one of the issues with the company: It’s simply very small overall. If it can’t scale up, it’ll die sooner or later. Further, Hypercharge Networks continues to lose much more money than it makes. The company deserves kudos for narrowing those losses from $2.5 million to $2.2 million over the last year. However, it essentially only has enough cash to cover 3-4 more quarters of similar losses.
The company didn’t provide any guidance in that report so investors can only guess where it’s headed. While the company’s red flags might not be as severe as those at other firms it’s still best to avoid it.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
