EVGO - EVgo stock price analysis: the comeback could be epic
2024-06-06 00:04:00 ET
EVgo (NASDAQ: EVGO) stock price has crashed hard in the past few years as concerns about the electric vehicle industry continued. It has tumbled by almost 40% this year and by over 45% in the past 12 months. Also, the stock has dropped by over 91% from its highest point on record, giving it a market cap of over $649 million.
The case for EVgo
There are several reasons why EVgo shares will rebound in the long term. First, the company is growing well. The most recent financial results showed that revenue jumped by 118% in Q1 to over $55.2 million. This happened as the number of stalls jumped from 2,350 to 3,250 and the trend will continue.
EVgo expects that its revenue growth will continue this year. After generating $50 million in 2023, the company expects that its revenue will be between $220 million and $270 million
Additionally, the company has also reduced its losses and cash burn. Total net loss in the first quarter dropped from over $49 million to $28 million. Its adjusted EBITDA moved from $20 million to $7.2 million, meaning that the company is on a path toward profitability.
Second, despite challenges, the electric vehicle industry is still growing. For example, Rivian delivered over 13.5k vehicles in the first quarter, A 70% increase from the same period in 2023. Lucid Motors deliveries jumped to 1,728 and is on track to deliver 9,000 vehicles this year.
Further, hybrid vehicles are growing substantially in the United States and other countries. All this means that the company will continue seeing demand for its solutions in the coming years.
EVGo will likely benefit from the ongoing federal and state investments in electric vehicle charging infrastructure. The Biden administration has set aside almost $8 billion for charging networks. Many states have also set aside more funds to increase the charging infrastructure.
Fourth, EVgo has a good balance sheet with over $174 million in cash and short-term investments, meaning that it may not need to raise cash this year. It has also applied for a DoE loan to boost its balance sheet.
EVGo stock price forecast
The other reason why the EVgo share price could rebound is because of its chart pattern. On the weekly chart, we see that the stock has formed a falling wedge pattern, which is one of the most popular bullish signs in the market. This wedge pattern is nearing the confluence level.
The stock has also moved to the accumulation phase of the Wyckoff Method. This phase is usually followed up with the markup stage, which is characterised by higher demand. Therefore, there is a likelihood that it will bounce back to the key resistance point at $3.85, its highest point in December. This target is about 77% from the current level.
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