Evgo Inc (NASDAQ: EVGO) is up 10% in premarket on Friday after securing a $1.25 billion guaranteed loan facility from the US Department of Energy (DOE).
Evgo will use this loan to set up another 7,500 fast-charging stalls across the United States.
Following the buildout, the company will have a network of about 10,000 electric vehicles charging stations.
Despite today’s rally, Evgo stock is down close to 25% versus its year-to-date high.
Why does the DOE loan matter for Evgo stock?
Evgo wants to own and operate the aforementioned total of 10,000 fast-charging stalls by 2029.
The company is essentially targeting a more than three-fold increase in its network footprint over the next five years to further strengthen its name as a leader in EV infrastructure.
“We are well-positioned to deploy the infrastructure needed to support both current and future domestic investments in transportation electrification,” Evgo chief executive Badar Khan said in a press release today.
The news arrives only days after Evgo and automotive giant General Motors were reported to have surpassed 2,000 co-branded fast-charging EV stations in the US.
Versus its year-to-date low, Evgo stock is currently up a whopping 250% at writing.
JPM remains bullish on Evgo Inc
Evgo expects to create more than 1,000 new jobs in the US as it uses the government loans to build new fast-charging stalls for electric vehicles.
The DOE announcement, as per JPMorgan analysts, was nothing short of an “early holiday gift” for Evgo shareholders.
The loan facility will serve as a material positive catalyst for the company’s share price, they added.
JPM expects Evgo to focus on execution to achieve operational milestones that will in turn boost financials and unlock further upside in the EV stock.
“Unlike hardware-software peers, Evgo’s fast charging owner-operator model has been scaling well with higher utilization and charge rates in the current muted EV environment,” according to the investment firm.
Evgo stock does not, however, pay a dividend at writing.
Are Evgo shares out of any further upside now?
JPMorgan expects Evgo to benefit from “higher utilization on every charger on its network”.
Last month, the company reported a 92% annualised growth in revenue to $67.5 million for its third financial quarter, indicating solid demand for its fast-charging stalls.
The record-breaking quarter showed improvement in adjusted EBITDA as well. Evgo has a customer base of more than 1.2 million at writing.
More importantly, Evgo also raised its guidance for revenue in November. CEO Badar Khan told investors at the time:
Evgo is poised to lead the industry as the charging provider of choice. We’re working diligently to drive our next phase of growth and deliver continued and sustainable value creation to our shareholders.
Our market expert Crispus Nyaga expects Evgo stock to surpass $12 in 2025.
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