Despite positive financial performance and promising results, EV charging stocks continue to face investor indifference. However, there are reasons to believe that this trend could reverse in the near future.
Beam Global Reports Impressive Results
On Monday evening, leading EV charging equipment provider, Beam Global (ticker: BEEM), announced better-than-expected sales figures. They reported a total of $17.8 million in sales, marking a significant 380% increase compared to the previous year and surpassing analysts’ projected revenue of $13.5 million. Although Beam has yet to achieve profitability, their per-share loss of 32 cents was slightly better than the anticipated 34-cent loss on Wall Street.
Market Response Falls Short
Despite the positive results, Beam’s stock price experienced a decline. In late trading on Tuesday, the shares saw a 4.8% dip, while the S&P 500 and Nasdaq Composite registered declines of 1% and 0.9% respectively.
Similar Story for Other EV Charging Stocks
Beam’s recent trading activity mirrors the overall sentiment surrounding EV charging stocks. Over the past six months, Beam’s stock has decreased by 46%. Similarly, shares of EVgo (EVGO), ChargePoint (CHPT), and Wallbox (WBX) have experienced declines of 38%, 43%, and 52% respectively during the same period.
Beam’s Unique Business Approach
Beam’s business model sets it apart from its competitors, although all are part of the EV charging ecosystem. While EVgo, ChargePoint, and Wallbox focus on manufacturing charging equipment and supporting charging stations, Beam specializes in providing solar equipment to power EV chargers off the grid. This innovative approach eliminates the need for extensive infrastructure development such as digging trenches to connect to the existing power supply. Although Beam’s solution may be more costly in certain instances, it offers significant cost savings in locations like New York City where obtaining permits and laying electrical cables in the street can be time-consuming and expensive, costing up to $2,000 per foot.
Broader Market Challenges
Beyond the EV charging sector, Beam CEO Desmond Wheatley acknowledges the overall struggle faced by growth stocks. He states, “Growth stocks in general have been very, very difficult here.”
In summary, EV charging stocks, including Beam Global, have faced a lack of investor enthusiasm despite delivering strong results. However, a potential reversal in sentiment along with unique business strategies could reshape the trajectory of these stocks in the coming months.
The Challenges Facing EV Charging Companies
The iShares Russell 2000 Growth ETF (IWO) has experienced a slight decline of about 1% over the past six months, performing about four percentage points worse than the Dow Jones Industrial Average. While this difference may seem insignificant, it is worth noting that growth stocks that are not yet profitable have been hit even harder than the average. This includes the EV charging group.
There are several factors contributing to this situation. One factor is the declining popularity of growth stocks. Another factor is the changing composition of the shareholder base. Retail investors are increasingly entering the market and tend to hold smaller positions and engage in more frequent trading, which creates additional volatility for individual stocks or groups of stocks.
Additionally, concerns about the progress of the EV revolution are growing. General Motors (GM) experienced a decline in EV sales during the second quarter compared to the first quarter. Ford Motor (F) has recently adjusted its EV growth targets and increased its projected EV loss for 2023.
However, there seems to be a discrepancy between perception and reality when it comes to EV sales. While there is a perception of weak sales, U.S. EV sales reached record levels in both the first and second quarters of 2022. Furthermore, business trends in the industry remain positive. According to Desmond, there is a healthy backlog of orders equivalent to about two-quarters of sales, and the sales pipeline is four times the size of the backlog.
It is important to note that EV charging companies will eventually need to turn a profit. However, this might take some time. Analysts on Wall Street predict positive earnings for these companies around 2026. Nevertheless, it is likely that perception about the industry’s potential will shift sooner. Investors should be prepared and informed about which companies can benefit from this changing tide.
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