EVGo (NASDAQ: EVGO) Shares fell 27% through 10:05 a.m. ET Tuesday after the electric vehicle charging station operator announced last night that EVgo Holdings, LLC, will sell at least 23 million new shares of common stock (and perhaps as many as 26.5 million) in a secondary offering. (We further learned this morning that the shares will cost $5 each).
And here’s the big news: EVgo Holdings and EVgo are too not the same.
To EVgo’s credit, this was made clear in a press release, stating: “EVgo Holdings, LLC [is] a subsidiary of LS Power Equity Partners IV, LP,” a shareholder of EVgo itself – so for clarity, from now on I will refer to EVgo Holdings as “the insider.”
So basically what we have here is an insider selling a large chunk of EVgo stock. The insider will get all the money from this sale (somewhere between $115 million and $132 million before fees). And EVgo gets none of it.
This revelation seems to have shocked and shocked EVgo investors today – and it’s no wonder. In short, we’ve just been told that someone who owns about 25% of EVgo’s outstanding shares is dumping them onto the market, and at a price 21% lower than where EVgo’s shares closed last night.
Everyone else will hold shares in an EV charging stock that has never made a profit, and that most analysts think will still be losing money in ten years… while one of the largest shareholders of this EV charging stock will at some point goes bankrupt. large discount to the current share price.
It seems to me that this is a strong indication that it is time to throw in the towel and sell.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why EVgo Stock Crashed 27% Today was originally published by The Motley Fool
