Blink Charging To Acquire SemaConnect For $200 Million
Blink Charging (NASDAQ: BLNK) just announced a deal to acquire SemaConnect for $200 million. This deal is a game-changing move for the company as it not only adds roughly 30% more charging stations to the network, it adds another 150,000 EV driver members to the network and has the company well set up to aid the Biden Administration. The Biden Administration has pledged to build out an EV charging network with over 500,000 stations and Blink Charging will be at the fore.
From the DOT: “No matter what kind of EV a user drives, what state they charge in, or what charging company they plug into, the minimum standards will ensure a unified network of chargers with similar payment systems, pricing information, charging speeds, and more. The standards also establish strong workforce requirements for installation, maintenance, and operations to increase the safety and reliability of charging station function and use, and create and support good-paying, highly-skilled jobs in communities across the country.”
Blink Charging Is The Only Vertically Integrated Charging Company
The deal for SemaConnect is worth $200 million in cash and stock and makes Blink the only vertically integrated charging company with operations from R&D to services sales and the analysts are noticing. Analysts at Needham say the deal looks “very strong” and raised their price target because of it. The new target of $27 is $2 higher than before but still well below the Marketbeat.com consensus of $32. The $32 consensus target is down in the 12 and 3-month comparisons but stabilizing in the wake of the last earnings report. Needham has a Buy rating on the stock compared to the broader consensus of Hold.
“Benefits we see are: manufacturing capacity, an expanded client and customer base, more developed DCFC tech, talented employee pool, and potential upsell opportunities to existing customers which will all strengthen BLNK’s relative competitive position. SemaConnect’s best-in-class margins combined with (the) potential for BLNK to cut its level 2 hardware COGS by ~30% should allow the company to reach mid-30’s gross margin sooner,” says analysts Vikram Baghi.
The Institutions Have Blink Charging In The Cross-Hairs
The institutions only own about 37% of Blink Charging but don’t let that fool you. Although the total holdings are still small they are growing fast. The net of activity over the last 12 months is worth $237.75 million in purchases which is worth about 35% of the market cap with shares trading at $148. Assuming this trend continues, and we think it will, the institutions could easily push their total ownership to over 50% by the end of the year. Among the more notable owners is State Street Advisory Group and Invesco which own about 4.6% between them. The insiders, on the other hand, own about 17% of the stock and they haven’t been selling.
Turning to the charts, it looks like Blink Charging might be at the bottom. The price action has been trending lower for many quarters but the combination of better than expected results and the push for nationwide charging stations put an end to it. Support appears to be at the $14 level which has been tested 3 times. Assuming the market follows through on this signal, we see shares of Blink charging entering a reversal very soon. Longer-term, Blink is well set up to capitalize on the EV revolution, assuming it can turn a profit the stock should return to its all-time high levels over the next 2 to 3 years.