As the U.S. infrastructure bill passed last year, investor interest in companies like the maker of charging stations EVgo (NASDAQ:EVGO) jumped up. Since the bill provided for funding for the construction of electric vehicle (EV) charging networks, a long position in EVGO stock appeared to be a definite winner.
Yet there is no sure winner on the stock market. From mid-November, EVgo was banned because the share price was literally cut in half.
As we will see, EVGO stock hit a critical resistance level before falling. However, resistance levels are meant to be broken, especially when a stock represents high conviction business in a growing market sector.
The data will show that EVgo’s business model, which involves both EV chargers and related applications, has been very successful. Therefore, if there is a mismatch between the stock price and the actual value of the company, contrarian investors should be prepared to take advantage of this opportunity.
A closer look at EVGO’s stock
Going back to the beginning, EVGO stock debuted on July 2, 2021, opening its first trading session at $ 15.
Oddly enough, the action was not a big hit on Wall Street at first. In fact, the stock price fell to $ 7 and changed in September.
However, as the U.S. infrastructure bill gained attention in the news headlines, EVGO stock saw a rapid recovery. In November, the stock hit the $ 20 level, although this rally was short lived.
Therefore, traders had another chance to charge below $ 10 in early January 2022. This leaves open the possibility of a doubling in the stock price – no guarantees, of course, but the stock has reached. $ 20 previously and it could happen again soon.
A revolution enhanced by applications
In order to engage Millennials and Zoomers in the vehicle electrification movement, it is necessary to use smartphone technology.
For young people, that means providing downloadable apps to help them stay on top of the VE community. Thus, EVgo has been aggressive in the use of mobile applications to promote the company’s products.
Not too long ago, Recargo, a subsidiary of EVgo, announced that the PlugShare platform, billed as the world’s largest electric vehicle community, has surpassed 1 million app downloads since the start of 2021.
PlugShare is a platform used by electric vehicle drivers to locate and select public chargers. It’s also a social app, as users can share their experiences and feedback around specific places with other drivers.
As EVgo CEO Cathy Zoi explained, “Electric vehicle adoption takes more than cars, it requires great cars, reliable charging and great software. “
In addition, Zoi remains optimistic because “this 1 millionth [PlugShare] The annual download milestone is one of many as the growth of electric vehicles proliferates.
Progress in California
Meanwhile, more positive news is looming as EVgo continues to advance the construction of California’s EV infrastructure.
EVgo has a tradition of installing EV charging infrastructure in the state, including the first chargers in the towns of Compton and Inglewood.
Believe it or not, over 80% of Californians live within 10 miles of an EVgo fast charger. And, that number is likely to increase soon.
This is because EVgo was selected by the State of California for grant proposals of $ 1.7 million. The proposed funding would be used to establish 38 new DC fast-charging stations at five locations.
These financial awards are to be made by the California Air Resources Board through the Bay Area Air Quality Management District. All targeted sites will include 350 kilowatt fast chargers for power sharing and routing. These would be able to recharge most vehicles up to 80% in 15 to 45 minutes.
These new electric vehicle charging sites “will help Californians of all neighborhoods and income levels reap the benefits of electric driving,” said Jonathan Levy, EVgo chief commercial officer.
The bottom line
No one can promise that EVGO stock will come back to $ 20. However, the circumstances are favorable for an imminent rally.
EVgo is forward thinking in its use of apps to attract more young drivers into the fold. Additionally, California is the Mecca for vehicle electrification and EVgo is clearly a preferred company for building the state’s EV infrastructure.
So there appears to be a mismatch between the EVGO share price and the booming business of the company. Therefore, investors should prepare for a possible doubling of the share price in 2022.
At the date of publication, David Moadel did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.