Short interest data is a very powerful investment tool. Short sellers tend to be well-informed, high-conviction traders. If they’re shorting a stock, there’s usually a good reason they are doing so.
In this report, we are going to look at the short interest data on EVgo Inc (EVGO:US). EVgo is an American company that owns and operates electric vehicle (EV) charging stations. Currently, it has more than 850 fast charging stations in more than 30 US states. The company is listed on the Nasdaq and has a market cap of approximately $407.8 million at present.
EVgo Has High Short Interest
We last covered EVgo back in July.
At the time, 31.29 million shares were on loan, equating to a short interest of 45.518%. We viewed this as a red flag.
Since that report, EVgo’s share price has fallen from around $6.37 to $5.86 – a decline of around 8%. So, the short sellers will have generated profits here.
It seems that they are not done yet though.
Today, there are 35.18 million EVgo shares on loan, which equates to around 50.7% of the free float. Utilization (a measure of demand from short sellers) is 100% while the cost to borrow stock is a high 36.83%.
These figures indicate that the short sellers expect the stock to continue its downward trend.
Why Hedge Funds Are Shorting Evgo Stock
As for why the short sellers are targeting EVgo, it could be down to the company’s ballooning losses. For 2023, Wall Street expects the group to generate net losses of $106 million These are much higher than the net loss of $57 million posted for 2021. In the current environment, in which funding is becoming harder to obtain, unprofitable companies are very much out of favor.
It could also be down to the stock’s valuation. For 2022, analysts are expecting EVgo to post revenue of $48.4 million. That puts the stock’s trailing price-to-sales ratio at 8.37.
It’s worth pointing out that EVgo has released some positive news recently. For example, on January 5, the company announced a partnership with Amazon. And in December, the company announced a partnership with Lyft.
This news doesn’t seem to have impacted the short sellers’ views, however, as short interest has remained very high.
Given the elevated level of short interest here, we think caution is warranted toward the stock in the near term.