BLNK

Trade of the Day: Buy Blink Charging (BLNK) Stock Call Options Ahead of Q1 Earnings

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Blink Charging (NASDAQ:BLNK) will disclose its quarterly results after market close today, setting up a high-risk wager. Presently, the EV sector is suffering from a significant demand drop. At the same time, it requires public charging solutions. Therefore, it’s possible that BLNK stock could shoot higher, offering a viable (albeit extremely speculative) opportunity.

To be sure, the EV sector itself is a treacherous one. Most notably, industry stalwart Tesla (NASDAQ:TSLA) finds itself down almost 30% on a year-to-date basis. Broadly speaking, pressures against the consumer economy – particularly blisteringly hot inflation and elevated borrowing costs – have crimped demand. In response, Tesla sparked a price war, deflating the EV market, which also took down TSLA stock.

On paper, that doesn’t bode well for BLNK stock as this dynamic translates to decelerated growth. And that ultimately translates to a smaller-than-expected total addressable market. However, Blink Charging enjoys a critical advantage.

As of the latest estimate, two-thirds of U.S. housing units had a garage or carport. This shows that the EV industry will need robust public charging solutions. That’s where BLNK stock could come into play.

A Tough Playbook to Digest

Blink Charging will post its fiscal first-quarter earnings report after today’s closing bell. Analysts are looking for the company to post a loss per share of 24 cents on revenue of $33.73 million. The high-side estimates call for a loss of 17 cents per share on sales of $36.77 million.

In the year-ago first quarter, Blink reported a loss per share of 53 cents on sales of $21.67 million. At the time, however, analysts had anticipated a loss of 46 cents on revenue of $22.07 million. Of course, that raises fears that Blink might miss again, posing downside risks for BLNK stock.

Much could hinge on management’s commentary along with its forward guidance. Ideally, the bulls will be looking for clues that the prior boom in EV sales contributed to higher demand for public charging services.

Further, by incorporating charging stations at places where people frequent – apartment units, office complexes and even recreational parks – there’s a possibility that Blink may have filled in the gaps that the Tesla Supercharger network has yet to occupy.

Trade of the Day: Buy BNLK Stock Call Options

If you can handle the prospect of extreme volatility, you may be interested in the trade of the day: Buying BNLK call options ahead of its Q1 earnings report. Specifically, the 20 Sept. 2024 $3 call may be the most balanced approach.

Chart by Josh Enomoto, InvestorPlace.com

For one thing, the bid-ask spread (as represented by the midpoint price) of 6.45% is relatively reasonable considering the high-risk nature of BLNK stock. In addition, this call saw volume of 108 contracts and featured open interest of 7,843 contracts by Wednesday’s close.

Second, the implied volatility (IV) of this call option is 90.38%. This metric trades at a premium to the historical volatility of 74.62% of BNLK stock options. Still, many other derivatives have incurred a higher IV, with some transactions featuring a much higher ratio. That implies a significant premium for option buyers.

Finally, BLNK stock closed at $2.90 yesterday. That puts it achingly close to the $3 level. Generally speaking, the market prefers to settle around psychologically significant whole numbers. Therefore, it’s almost a certainty that the bulls will at least attempt to push BLNK to $3 and maybe beyond.

If management provides upbeat guidance, that could really set things in motion. To reiterate, BNLK stock is high risk. Nevertheless, the reward could be intense if the stars align just right.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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The post Trade of the Day: Buy Blink Charging (BLNK) Stock Call Options Ahead of Q1 Earnings appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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