Is EVgo Stock Worth $8.50 a Share?

Is EVgo stock worth $8.50 a share? Some seem to think so.

This, after the company, which makes EV charging stations, announced it landed a $1.05 billion loan commitment from the DOE. That’s billion — with a “B.”

EVgo stock

To clarify, it’s actually a conditional commitment for a loan guarantee of up to $1.05 billion of debt financing.

To be honest, any DOE lucre earmarked for charging network expansion probably should’ve gone to Tesla (NASDAQ: TSLA), as it already has the largest charging footprint across the country. But that’s politics for you. I suspect if the Biden administration didn’t have such a vendetta against Elon Musk, that loan would’ve been hand-delivered to Tesla.

But I don’t make the rules. I just profit from them. And clearly, so did EVgo shareholders.

See for yourself…

EVgostockchart

And the good news kept coming, too.

Following that announcement, UBS upgraded EVgo from neutral to buy, moving its price target from $4 to $8.50. As well, EVgo added to investor enthusiasm on Wednesday after announcing it signed an MOU to co-develop next-generation charging architecture.

If you’re unfamiliar, Delta is a major player in the world of switching power supplies and thermal management products. The company’s technology is in everything from industrial automation and data center infrastructure to energy storage and, of course, EV charging.

The question, however, is EVgo a good investment at this point?{Macro}

EVgo Stock: Is it a Buy at these levels?

A few weeks ago, I actually thought EVgo stock was accurately priced. The company hasn’t shit the bed like so many other charging companies that started around the same time. And to be fair, this is not a business that can turn huge profits overnight.

So yes, with the company’s Q2 results showing a 146% increase in charging network revenue and overall sales up 32%, it looked like EVgo was successfully pushing through the currents. And at around $3.50 per share, it seemed like a fair valuation. Especially when you consider the company is probably less than 2 years away from profitability.

But at today’s much higher levels, which exist solely because of that DOE loan guarantee, it just doesn’t make sense.

EVgo has suggested that the low-cost financing from the DOE will help it build out about 7,500 fast chargers across the country. That’s not a lot when you compare it to the 27,000 fast chargers Tesla already has installed throughout the U.S.

This, dear reader, is what EVgo is up against…

tslachargingnetwork

All those dots represent Tesla charging stations. Not just the chargers themselves, but actual stations where there could be anywhere from 5 to 50 chargers. And there’s also a new Tesla charging station in California that will soon be equipped with 160 chargers. So yeah, that’s a pretty big hill for EVgo to climb.

I also understand that all of these new chargers won’t even be deployed until the second half of 2026. By then, there could be all kinds of new charging technologies that would make EVgo’s “new” chargers far less valuable.

That’s not to say the company couldn’t pivot in an effort to integrate this new technology. I’m just not convinced it has the ability to rapidly adjust its plans the way a company like Tesla can.

I suppose I keep coming back to the same place. Can EVgo, even with the help of the DOE, effectively compete in a marketplace dominated by Tesla?

I guess we’ll find out soon enough. And to be sure, there’s room for more than just one EV charging player out there. While Tesla is the clear leader, EVgo, ChargePoint (NYSE: CHPT) and Blink Charging (NASDAQ: BLNK) can all turn a profit in this space. And I believe EVgo will ultimately be successful. But that doesn’t mean it’s fairly valued at current levels. Which it is not.

Of course, I could be wrong. There might actually be enough enthusiasm about EVgo right now to push the stock up over $8.50 a share. But if I’m going to take a risk like that, I want the reward to be much higher. For that kind of risk, I need a potential reward of a triple bagger. Which is why, instead of chasing EVgo stock, I’d rather set my sights a bit higher with something like this new high-tech materials company that’s providing what the BBC calls, a “miracle material” for batteries.

It’s actually rolling out its own patented batteries right now that can charge up to 70 times faster than the batteries we use today, and they last three times longer than the current lithium batteries on the market.

My good friend and colleague Alex Koyfman, who discovered this virtual gold mine, tells me this thing could more than double within 6 months. 122%, to be exact.

I don’t know about you, but that sounds far more attractive than holding out for a 40% gain from a stock that’s overvalued by more than 100%.

Of course, the proof is in the numbers, which I’m including here so you can see the evidence for yourself.

While I do think EVgo stock will perform well in a few years, right now it’s too expensive and just not worth our time, when we have a 122% gain staring us right in the face from this advanced battery materials company.

To a new way of life and a new generation of wealth…

Jeff Siegel Signature