Blink Charging (NASDAQ:BLNK) stock has declined by more than 73% since the start of the year.
With this big drop, those among the risk-hungry may be curious whether BLNK stock, at today’s super-low prices, has become a “bottom-fisher’s buy.”
This is especially the case, given this stock’s high short interest. According to Fintel, 27.6% of Blink’s outstanding float has been sold short.
While not for certain, there may be the possibility for shares to get “short squeezed” to considerably higher prices, if the company manages to reveal some positive surprises like strong results or a game-changing development.
Yet while a “squeeze” may in theory be possible, whether it is probable is another question entirely. At least, that’s the takeaway, upon diving into this floundering company’s recent operating performance.
That’s not all. Other developments point to more trouble ahead for shares.
BLNK Stock and its Dubious Squeeze Potential
With over a quarter of its float sold short, Blink Charging is one of the most heavily-shorted stocks out there right now. This year, several of the most heavily shorted stocks have experienced strong squeeze rallies.
Unfortunately, while going contrarian has paid off for other stocks with a high level of short interest, I wouldn’t run to make such a bet with BLNK stock.
While other stocks have squeezed higher, thanks to the reporting of “less bad” or “better than expected” results, this one has failed to take off again, even after having some similar developments.
For instance, back in August, Blink Charging released its results for the quarter ending June 30, 2023.
Despite reporting a tremendous year-over-year jump (186%) in revenue, and raising its full-year revenue guidance, shares only experienced a 11% pop. That was followed by a 14.2% price decline the following trading day.
Also in recent months, the company has inked major charging partnership deals with large brick-and-mortar retail chains, such as a leading fast food franchisee in Puerto Rico. These big announcements also failed to spark a squeeze rally.
Why the Skeptical Side is Likely on the Money
Retail traders have successfully outfoxed the so-called “smart money” short-sellers frequently this decade. However, with BLNK stock, the crowded short-side is likely on the money with its skepticism about the company’s future prospects.
For one, while Blink Charging may be in the growth fast lane, Blink has made no progress with getting towards profitability. Even with the big jump in revenue, losses have widened as of late, coming in wider-than-expected in each of the last four quarters.
While sell-side forecasts call for losses to narrow in 2024 and 2025, reaching profitability is still seemingly many years away.
There’s another factor at play contributing to the BLNK bear case. It’s the factor behind the post-earnings plunge for shares I discussed above.
As InvestorPlace’s Chris MacDonald reported last month, Blink disclosed on Aug. 9 that it had received a subpoena from the Securities and Exchange Commission in July, requesting information on various “discrete disclosure matters.”
While the SEC investigation has yet to reveal any bombshells against the company and its prior statements/disclosures, it will continue to weigh on BLNK’s performance until resolution.
Continued operating losses and regulatory scrutiny are two of the largest red flags with Blink Charging. There are some smaller ones as well. A good example is with the heavy selling of a former insider over the past few months.
Earlier this year, Blink founder Michael Farkas exited the CEO role, and resigned from the company’s board of directors.
Since his exit, Farkas has sold a considerable amount of his personal position in the company, based on insider selling transaction records.
Insiders sell for a variety of reasons, but this move hardly inspires confidence. It’s just one more factor that may suggest things are getting worse, not better, for Blink.
Adding this red flag atop the other, it’s clear that BLNK stock is a straight-up “avoid” situation.
BLNK stock earns an F rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.