An e-zine that keeps you informed on the hottest trends on Wall Street, provides you with the key information to make you filthy rich (*your results may vary)
by Joseph Hargett | December 28, 2021
Read up on your favorite stock — will it put on a show?
Hear Mr. Great Stuff say it’s a game of EV come and EVgo (Nasdaq: EVGO).
But I wonder, does he know? Has he ever invested like this? And I know that he’d be here right now if I could have let him know somehow…
But, like … I’m right here!
Welcome back from the holiday break, Great Ones! Yes, I know some of you are still on break. Lucky. And some of you got no break at all. Them’s the breaks, I guess.
Anywho, as the song goes, every rose has its thorn … just like every investment idea sings a sad, sad song. And today’s sad, sad song belongs to electric vehicle (EV) charging company EVgo.
This morning, Needham — mmmm, ham — initiated coverage on EVGO stock with a hold rating.
According to Needham, strong partnerships and self-ownership of charging stations, “combined with the company’s disciplined expansion strategy, provide EVgo with industry-leading asset utilization and strong operating leverage … We believe the company’s strategy, astute management team, strong liquidity position and solid fundamentals will make it a formidable player in the space.”
That’s a pretty strong endorsement for just a hold rating.
So, what’s the catch, Needham?
Well, the ratings firm thinks that Wall Street’s expectations are “too aggressive” and Needham — mmmm, ham — says it will “remain on the sidelines until we see convergence between our estimates and consensus and/or a better entry point.”
Long story short — too late — Needham likes EVGO stock but thinks it’s too expensive compared to the company’s revenue and growth projections.
But wouldn’t that mean a sell rating at these levels? Curiouser and curiouser.
Allow me to take over here and explain why I think Needham is cautious on EVGO stock. You see, I talked about EVgo and its two major EV charging competitors back in November. There are essentially three competing models in the EV charging game:
• Own the charging stations and generate revenue with electricity premiums.
• Own the charging stations, but also sell them directly to businesses and generate revenue with electricity premiums.
• Sell charging stations directly to businesses and generate revenue via “Charging as a Service” packages.
Back in November, I argued that ChargePoint’s business model was the best of the three — mostly because trying to make money by charging for electricity seems like a very bad idea.
Just ask ChargePoint CEO Pasquale Romano: “I wouldn’t want a driver as a customer because I think I’d starve to death. There’s not a lot of money in electricity.”
But that’s exactly how EVgo operates. Furthermore, there are additional costs that EVgo has to account for, such as rent and infrastructure maintenance.
You don’t think EVgo gets to place its charging stations in prime real estate locations for free, do you? Or that EV charging station maintenance is done out of the goodness of a local business’s heart?
Nope. That’s all overhead that EVgo has to make up for in the price of its electricity.
If EVgo has the only convenient charging station in your area, you’re gonna pay EVgo’s prices. But let’s say there’s a ChargePoint station just up the road with cheaper electricity — you know, because they don’t have the same overhead?
Well, we all know how that’ll go. I’ve seen drivers cruise to the other side of town just to save two pennies on a gallon of gas. While Needham doesn’t come right out and say it, the analysts are clearly worried about EVgo’s electricity pricing power in the market.
Right now, that pricing power lies with ChargePoint … erm, well, ChargePoint’s customers, that is.
ChargePoint doesn’t charge a premium for electricity, but it doesn’t stop its customers from doing so. And this flexibility allows ChargePoint’s customers to set their own price for electricity, which, if the business wants to, could be absolutely free … and there’s no way EVgo can compete with that.
The biggest caveat here is that we’re still in the very early innings of the EV market, from production to sales to charging. There’s still a lot of growth to be had, a lot of competing technologies and a lot of questions to be answered.
Needham is right to come out cautiously on EVgo. The company does have compelling prospects and huge potential … if it plays its cards right. There’s room for more than one winner in this space, that’s for sure.
But when I compare EVgo to its competitors, I, too, am left with a sense of “let’s hold and see where this goes first” when it comes to EVGO stock.
That said, I know you EV investors. Y’all want the latest in electrified greatness — right here, right meow! Well, check this out:
A former Tesla employee just released a brand-new innovation promising to make every EV out there instantly obsolete.
It even goes beyond EVs: His new technology is rolling out to power 50 million homes and businesses, setting up a new market 10X bigger than EVs — and you can buy in right away.
Meta Platforms (Nasdaq: FB) must be doing something right in its quest for digital domination. The company’s latest Oculus VR headset — dubbed the Quest 2 — sold like hotcakes this holiday season.
According to research firm Thill, more people downloaded the Oculus app on Christmas morn than any other product in Apple’s (Nasdaq: AAPL) App Store. Not only were Oculus downloads up 70% from the year prior, but daily active users jumped 90% year over year.
For some investors, Quest 2 sales already spell the early adoption of Meta’s, well, metaverse — and could act as a boon for FB stock despite ongoing privacy issues:
As teens spend an increasing amount of time on services like SNAP, TikTok, RBLX and Fortnite, it is becoming more challenging for FB to attract and retain younger users.
We believe that Quest 2 could serve as an on-ramp for attracting these users, as they can more easily be introduced to FB’s diverse offering of games, experiences and social platforms. We also see Oculus’ mainstream success as a potential catalyst for game developers to work more closely with FB.
Personally, I’d like to see demographic numbers for Oculus users before making this kind of statement. I haven’t heard of too many kids clambering for an Oculus this year … and I’ll bet even fewer adults added the Quest 2 to their holiday wish lists.
Still, considering these headsets retail for $400 a pop, any significant surge in sales should act as a growth driver for Facebook’s — sorry, Meta’s — bottom line. No wonder FB stock is up less than a percent today … whomp.
Mr. Great Stuff, can we … can we not do the “daddy” thing? Pretty please?
I was hoping you wouldn’t notice, but alas. The ever-so-awkwardly named GoDaddy (NYSE: GDDY) is up 6% today on the news that activist investor Starboard Value LP owns an $800 million stake in GDDY.
The group also signaled its plans to steer the GoDaddy ship in a new direction (starboard, presumably).
As of June, the web hosting services stalwart started dipping its toes into online sales with a new payment platform. Y’all smell that? Smells like sweet, sweet transaction revenue to me.
And GoDaddy’s already posting better-than-expected earnings and revenues as of its latest report, and GDDY shares are up over 6% on the news of Starboard’s investment.
There’s no place like home for the holidays, Great Ones … especially if sweeping COVID-19 infections grounded your flight plans and left you stranded in the middle of the country.
Thankfully, I’m not talking from personal experience this year. But that’s not the case for many U.S. travelers trying to head home this week.
See, wild weather conditions — what those of us who live in Kentucky call “just another day” — are partially to blame for the airline industry’s lump of coal. But ominous Omicron and its high transmission rate is the real Grinch here.
Cities across the country are already seeing steep spikes in COVID-19 cases thanks to this hard-to-control variant. (I mean, have you seen New York?) To stem the infection incursion, some 13,000 flights have already been canceled in the past five days.
United Airlines, JetBlue and Spirit were a few of the first airlines to abandon their flight schedules. Since Friday morning, they’ve grounded 5%, 7% and 8% of their planes, respectively.
But according to FlightAware data, most of this week’s jettisoned jets were scheduled to fly in and out of the country — and namely from, you guessed it: China.
Could this latest flight fiasco be an overreaction to Omicron? Maybe. But until we know more about this variant and its reaction to current COVID drugs, airline investors should buckle up and brace for a bumpy ride.
If a certain group of investors gets its way, Blockbuster might be back from the dead. Yes, that Blockbuster.
It’s a holiday miracle! For whom, though, I’ve no idea…
A group called BlockbusterDAO is raising funds to buy and relaunch the OG in-person Netflix, hoping to revive the brand as a decentralized film-streaming service.
Decentralize all the things!
That’s all fine and dandy, but since this is Great Stuff, I want to point out two issues here. There’s the fact that, frankly, resourceful internet users already have a decentralized way to … ahem … access literally any streaming content.
But then there’s the fact that BlockbusterDAO is raising these funds through NFTs — because normal means of zombie-fying Blockbuster would be too pedestrian in this brave new digital age.
The group of investors has much grander plans in mind:
Those are bold words to waste on a company like Blockbuster, which analysts are also calling “nostalgic” and “historic.” Nostalgic, I’ll give you. But historic? Maybe with emphasis on the “ick.” I still haven’t recovered from the memories of those somehow-always-sticky carpets (I don’t want to know … but I know).
All right, Great Ones, the final Quote of the Week … of the year!
Better make it the greatest quote of ‘em all, right? Well, it may be just that … from a certain point of view.
It’s prediction time again — ‘tis the season when everybody from CEOs and economists to Reddit gamblers sound off on what the bright, cheery new year shall bring. (I hope it brings burritos, personally.)
Well … um … duh.
Thank you, Captain Obvious, for that oh-so-brilliant insight. Christmas future is looking an awful lot like Christmas past … or someone forgot to update their predictions from last year.
Can we end the year with an anti-quote?
Let me know what greatness you’re getting up to this week at GreatStuffToday@BanyanHill.com. We’d love to hear from you! In the meantime, here’s where else you can find us:
Until next time, stay Great!
Editor, Great Stuff