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EVgo vs. Volta: Which Electric Vehicle Charging Stock is a Better Buy?

The global electric vehicle (EV) charging stations market is expected to grow significantly over the next 7 years. With this in mind, today I'll analyze compare EVgo (EVGO) and Volta (VLTA) to see which is currently a better investment.

According to Fortune Business Insights, the global electric vehicle (EV) charging stations market is expected to reach $111.9 billion, growing at a CAGR of  30.26% between 2021 and 2028. This impressive growth rate is expected to be fueled by the increasing number of EVs on roads and beneficial government policies. 

The Biden administration aims to spend over $7.5 billion on building over 500,000 EV charging units in the U.S. by 2030. Consequently, these industry tailwinds imply immense growth opportunities for EV charging stocks. 

Keeping that in mind, today I’ll analyze and compare two EV charging stocks: EVgo, Inc. (EVGO), Volta Inc. (VLTA), to see which one looks best. Founded in 2010, EVGO is a California-based EV charging company that has about 800 DC fast-charging station locations in the U.S. Year-to-Date (YTD), shares of EVGO have lost 0.79%.

Volta Inc., which became public through a SPAC merger with Tortoise Acquisition Corp. II on August 27th, also operates a network of EV charging stations in the U.S. YTD, VLTA stock has plunged 21.3% in 2021. 

Recent Developments 

On December 16th, EVgo released its new mobile app, simplifying the charging process as much as possible. With the new app, customers can charge their EVs via the EVgo app in three steps: plug in, tap to start, and charge up. In addition, the company integrated its loyalty program, known as EVgo Rewards™, allowing drivers to save more money by charging with EVgo.

On December 6th, Volta announced its expansion plans into the European market, focusing primarily on Germany, Austria, Switzerland, and France. The company’s Europe center is backed by experienced local teams of EV charging hardware and software engineers, SaaS experts, and digital outdoor media sales leaders operating out of initial offices in Berlin and Paris. This expansion should help the company benefit from the fast-growing European EV market.  

Recent Quarterly Performance & Analysts Estimates 

On November 10th, EVgo Inc. reported earnings for the third quarter of 2021. In Q3, EVGO's revenue rose 73% year-over-year to about $6.18 million, beating Wall Street's revenue consensus by $0.76 million. This growth was primarily driven by a 101% increase in retail charging revenue and a 122% rise in ancillary revenue. Its adjusted gross profit has been reported at $1.4 million, compared to $1.0 million in the prior quarter, with the adjusted gross margin improving by 80 bps to 22.2%.

Besides, network throughput grew to an all-time high of 8.0 Gigawatt-hours, representing a 31% increase compared to the second quarter of 2021.

The company’s Adjusted EBITDA came in at ($14.27 million) compared to ($5.4 million) million in Q3 2020. 

For the next quarter, the analysts expect EVGO's EPS to be ($0.12), while its top line is estimated to remain flat on a quarter-over-quarter basis at $6.02 million.

In terms of Volta's financials, its total revenue has increased by 77% on a year-over-year basis to $8.49 million in the third quarter of 2021. However, the company failed to beat Wall Street consensus estimates of $10.1 million, missing by $1.57 million.

The company's net loss was $43.05 million for the quarter, versus a $14.52 million loss in the year-ago period. As a result, its GAAP EPS stood at ($0.58), leading to an earnings miss by ($0.43). 

Volta's EBITDA loss came in at $38.29 million, up 305% compared to a loss of $9.46 ​million in Q3 2020. 

Currently, Wall Street expects VLTA's earnings to stand in the fourth quarter of 2021 at ($0.18) per share. Moreover, analysts forecast that its Q4 revenue should advance 52.3% quarter-over-quarter to $12.93 million.

Comparing Options Market Sentiment 

Looking at the January 21st, 2022 option chain for both EVGO and VLTA, we can calculate the expected price movement by utilizing the long straddle options strategy. So, my calculations indicate that EVGO stock could rise or fall by about 23% by the January expirations from the $11.00 strike price. Applying the same approach, VLTA stock is expected to rise or drop by around 26% from the $9.00 strike price. That aside, let's take a closer look at the calls/puts ratio as well. In EVGO's case, the open calls/open puts ratio at the $11.00 strike price comes in at 1.1x, implying a neutral options market sentiment. When it comes to VLTA, the open calls/open puts ratio at the $9.00 strike price is 2.29x, indicating a bullish options market sentiment.  

The Bottom Line

I believe that VLTA is a better investment than EVGO at these levels. The company’s expansion plans in Europe should accelerate its growth. Moreover, VLTA’s financials and forward growth rates look slightly better. Finally, VLTA has a better options market sentiment at the moment. 

EVGO shares were trading at $10.65 per share on Friday afternoon, up $0.08 (+0.76%). Year-to-date, EVGO has declined -0.56%, versus a 25.08% rise in the benchmark S&P 500 index during the same period.

About the Author: Oleksandr Pylypenko

Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.


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