EVgo stock price has imploded in the past few months, erasing some of the gains made late last year. It crashed to a low of $3.50 on Tuesday, down by almost 62% from its highest level in 2024, bringing its market cap to over $1 billion. This article explains why the EVGO stock price may surge by over 160% this year.
EVgo business is growing
The first important aspect is that EVgo’s business is having strong growth as demand for EV charging grows in the United States. Data shows that there are now over 3.5 million electric vehicles in the country. While the industry is slowing, there is a likelihood that more EVs will be sold in the coming years.
This growth will benefit EVgo because of its strong market share in the EV charging industry in the US. The most recent results revealed that the company made over $67.5 million in the third quarter of 2024, a 92% annual growth rate.
This growth happened as the firm aded 270 new stalls during the quarter, a trend that may continue growing. It ended the last quarter with 3,680 stalls and 1.2 million active customer accounts.
EVgo’s annual revenue has remained steady, a trend that may continue. For example, analysts anticipate that its annual revenue rose from $160 million in 2023 to $258.6 million in 2024. They also believe the figure will reach over $361 million in 2026. If this trend continues, the company will likely hit $500 million in annual revenue in 2026.
The challenge, however, as I wrote in January, is that the firm may have been affected by the recent California fires.
Strong balance sheet
Another reason why the EVgo stock price may surge soon is that its balance sheet is stronger than where it was a year ago. This means that its dilution trend will start to end. Data shows that the number of outstanding shares jumped from 23 million in 2021 to over 106 million. An increase in share count hurts investors because it dilutes their shareholding.
EVgo’s balance sheet has improved after the company reached a big deal with the Department of Energy (DoE). The company closed a $1.25 billion guaranteed loan facility from the DoE under its Title 17 Clean Energy Financing Program. These funds will be used to build 7,500 new fast-charging stalls nationwide.
The benefit of this loan is that it is guaranteed by the US government, meaning that it has low interest rates. The collateral will be its 1,5954 charging stalls in the US.
Further, EVgo’s business will also likely do well because of its partnership with General Motors. This partnership will help it to triple its charging network by 2029, a move that will push its revenues higher.
EVgo stock price analysis
The other key reason why the EVgo share price will bounce back is that it has strong technicals. On the weekly chart, we see that the stock formed a falling wedge chart pattern between 2021 and 2024. A wedge is one of the most popular bullish reversal signs in the market, which explains why it soared to $9.
The ongoing retreat is likely part of the formation of the double-bottom pattern at $1.76. If this happens, it means that the stock will rebound and retest the key resistance level at $9, the double-bottom’s neckline, which is about 165% above the current level. However, a drop below the support at $1.75 will invalidate the bullish view of the double-bottom pattern.
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