Shares of electric vehicle (EV) charging company EVgo (NASDAQ: EVGO) fell as much as 30.4% in trading this week, according to data provided by S&P Global Market Intelligence, after an insider sold 23 million shares for $5 apiece.
The big sale
LS Power, which was EVgo’s largest shareholder, announced an underwritten sale of 23 million shares on Monday. The sale was made at $5 per share with $4.8125 going to the seller and $0.1875 going to investment banks underwriting the deal.
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In a sale like this, the investment banks agree to buy shares at a discount to the market’s price, which was $6.09 per share as of last Friday’s close, betting they can sell shares for a profit over time. The market had other plans and shares have traded well below the $5 sale price all week.
Charging takes a hit
The charging business was once thought of as a great growth business in energy, but that hasn’t translated to profitability at any of the major players. You can see that EVgo has reported consistently larger losses as it’s grown revenue over the last few years.
EVGO Revenue (TTM) data by YCharts
Now, there may be more pressure as a new administration in the U.S. takes over in January and funding for charging and electric vehicles may be cut back. That could hurt the growth curve and certainly won’t help profitability. At least one large investor doesn’t think the future looks bright and is jumping ship before things get worse. Investors still holding onto charging stocks may want to do the same before it becomes impossible for these companies to raise money with sinking stock prices.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.