Trained Market Monkey

Maurice was discovered hurling banana peels at a chart of EVgo’s stock price, each peel landing with increasingly frustrated precision as the line dipped below $2. “Not again,” he muttered, adjusting his tiny wire-rimmed glasses. “Not. Again.”

Let me tell you something: I’ve seen a lot of investment opportunities come across my desk here at Trained Market Monkey HQ. Some of them are ripe bananas—solid, nutritious, you eat them and feel good about your choices. Some are green bananas—you have to wait, but you know what you’re getting. And then there are the bananas that are still attached to the tree, growing in a hurricane, while someone’s argument about their value is being screamed at you from opposite ends of a very crowded room.

EVgo, Inc. (ticker: EVGO) is that third banana. And despite every sensible fiber of my primate brain telling me to swing away to safety, I keep coming back to it because Foxy—my sharp-eyed colleague who has an uncanny ability to spot the next big wave before it hits—thinks there’s something genuinely compelling here. So we’re going to talk about why, and more importantly, why you should approach this with the kind of caution you’d use climbing a tree during an earthquake.

The Setup: The Charging Station Gold Rush (Without the Gold)

Here’s the thing about the electric vehicle revolution: everyone agrees it’s happening. Absolutely everyone. Your grandmother agrees. Your car disagrees, but everyone else agrees. And when there’s universal agreement on a mega-trend, someone has to build the infrastructure, right? Someone has to plant those charging stations like coconuts across the landscape. That someone is EVgo.

The company owns and operates a network of DC fast-charging stations across the United States—the kind of charging that gets an EV driver from “dead battery panic” to “actually functional” in under an hour. They’ve got their hands in hardware, software, data integration, and even PlugShare, their digital platform that helps drivers find and reserve chargers. It’s the entire ecosystem play, not just one piece of it.

And here’s where it gets interesting: revenue is growing at 75.5%. Not 7.5%. Seventy-five point five percent. That’s not the growth rate of a mature business—that’s the growth rate of something capturing market share in an expanding market. Foxy looked at that number, raised an eyebrow, and said, “That’s the kind of top-line momentum that actually matters.” He’s not wrong.

The Problem: Everything Else Is On Fire

But here’s where I nearly threw my entire keyboard at the wall: the profit margin is negative 10.8%. Negative. As in, they’re losing money on every banana they sell, hoping to make it up in volume—which is, famously, how you go broke faster than a monkey at a slot machine.

Free cash flow? Negative $117 million. The company is burning through cash like I burn through bananas during earnings season, except their cash pile is finite and mine is constantly replenished by the gift shop. Their debt-to-equity ratio sits at 80.636, which is the financial equivalent of building a house entirely on borrowed lumber while the foundation is made of paper towels.

The stock price right now is $1.865, down significantly from its 52-week high of $5.18. That’s a 64% decline. Not a correction. A demolition. And the short ratio is at 8.6%, meaning a lot of very smart people are betting this thing goes lower.

This is where the investment thesis gets genuinely complicated, and this is where Foxy earns his paycheck. Because yes, all of that is terrifying. But.

The But: The Thesis That Actually Makes Sense

Infrastructure businesses are weird animals. They’re not like selling software or widgets. They require massive upfront capital expenditure with the promise of long-term cash flows down the road. Think of it like planting a banana orchard. You spend money for five years—buying land, planting trees, nurturing them—and only in year six do the bananas actually start coming. If you only look at the first five years, you think the whole operation is insane. You’d be right to think that. But if you look at the trajectory, it’s different.

EVgo is currently in year three or four of that orchard-building phase. The Inflation Reduction Act and Biden’s infrastructure spending have essentially guaranteed a massive long-term market for EV charging. That’s not theoretical. That’s policy. Congress already wrote the check.

The installed base expansion is real. Unit economics are improving—meaning each charging station is becoming more profitable as utilization increases. The company is in the process of scaling operations with federal tailwinds at their back. If you believe that EV adoption continues on its current trajectory (and it’s remarkably hard to argue it won’t), then you also have to believe that DC fast-charging infrastructure becomes critical. Not optional. Critical.

Foxy’s thesis: EVGO is the company in the right place at the right time, but they’re bleeding cash because they’re in the build-out phase. The market has punished them for the bleeding. The stock is now trading near support at $3.00 (it’s at $1.865 as of now), which means it’s already discounted for failure. If they succeed—really succeed—at scaling and eventually turning profitable, this stock could absolutely reach $5.50 or higher within 3-5 years.

The Risk That Keeps Me Awake: The Cash Problem

The absolute nightmare scenario: EVgo runs out of money before the infrastructure build-out reaches profitability. Negative free cash flow of $117 million means they’re spending more than they’re taking in. If federal funding dries up, if they can’t raise capital, if utilization rates on their charging stations don’t increase as fast as they need—this thing doesn’t limp along. It fails. It fails hard.

The beta of 2.8 means this stock moves roughly three times as fast as the broader market. That’s great when the market is rallying and EVs are cool. That’s catastrophic when sentiment shifts and everyone suddenly cares about profitability again.

The negative forward P/E and the fact that they’re unprofitable mean traditional valuation metrics are useless. You can’t use them. You’re making a bet on the future based on revenue growth and the assumption that operational leverage will eventually flip the company into profitability. That’s a bet. That’s not an analysis.

The Honest Assessment

Look, I’m going to be direct with you because you deserve directness: EVgo is a high-risk, potentially high-reward situation that makes sense for a certain type of investor with a certain time horizon and risk tolerance. If you need the money in the next two years, this is not your banana. If you panic-sell when the stock drops 30%, this is not your banana. If you’re building a balanced, diversified portfolio for retirement, you should probably allocate only a small position here, if any.

But if you’re a long-term investor who can handle volatility, who believes in the EV mega-trend, and who can stomach the possibility of total loss while also being comfortable with the possibility of a 3x return over 3-5 years, then Foxy’s reasoning has merit. The company has real revenue growth, a real market tailwind, and a stock price that’s already discounted for serious trouble.

The path to profitability requires: (1) consistent growth in station utilization, (2) federal support to remain stable, (3) the company to successfully raise capital as needed, and (4) EV adoption to continue accelerating. That’s four things that all need to work out. That’s not a guarantee. That’s a bet with good odds, not certain odds.

Foxy entered at around $3.00 with a target of $5.50 and a thesis that extends 3-5 years. The stock is now lower than his entry point, which either means he was early or the thesis is broken. History suggests he’s usually early. But history isn’t destiny.

Disclaimer: Trained Market Monkey, Maurice, and our entire primate analysis team provide entertaining market commentary only. While Maurice’s Monkey Momentum Index™ and banana-based technical analysis have shown mysterious accuracy, they should never be considered financial advice. All investment decisions should be made in consultation with qualified financial professionals, not monkeys—no matter how impressive their fruit-throwing abilities may be. For real financial advice, please consult your financial advisor, who probably doesn’t accept bananas as payment.

Next week: We’re investigating whether infrastructure companies are actually bananas at all, or whether they’re something more exotic—and what that means for your portfolio.

Maurice’s Final Wisdom: “The best investments are the ones where you understand why they’re risky. If EVgo doesn’t scare you a little bit, you’re not paying attention. If it doesn’t excite you a little bit, you don’t understand the thesis. Good investment decisions live in that uncomfortable middle.”