Hook & thesis
EVgo is no longer just a growth story; it is a charging-network operator that is demonstrably improving unit economics. Recent quarters show rising gross profit and improving gross margins as charging revenue scales, and the company has publicized Autocharge+ adoption milestones that support revenue durability. Those trends, combined with a still-low stock price in the low-$3s, create an actionable trade: buy a tactical position with a tight stop and defined upside targets while the market waits for a formal rating upgrade tied to sustained profitability.
Put simply: the market should care because the business is moving from 'build and subsidize' to 'scale and optimize' - the numbers show it, the company is talking about it, and EVgo still trades near levels that leave upside to recent multi-dollar highs if execution continues.
What EVgo does and why it matters
EVgo owns and operates a public DC fast-charging network in the U.S., partnering with retail, transit and gas-station operators, OEMs and fleets to site chargers. That asset-heavy model benefits from scale: each additional session leverages existing fixed infrastructure (transformers, site costs, permitting), so higher utilization drives outsized improvements to gross profit.
The market should care because charging revenue is a recurring, usage-based stream that scales with EV penetration and better software/roaming adoption. Recent operational wins (partnership milestones and product adoption) are the type of catalysts that convert narrative into repeated revenue beats and — ultimately — re-ratings.
Data-backed fundamentals
Use the recent quarterly trend to judge progress:
- Revenue: Q1 2025 = $75.3M; Q2 2025 = $98.0M; Q3 2025 = $92.3M. Revenue is higher year-to-date versus earlier quarters and reached a record charging revenue quarter per company commentary.
- Gross profit and margin: Q1 2025 gross profit = $9.32M (≈12.4% gross margin); Q2 2025 = $13.91M (≈14.2%); Q3 2025 = $12.56M (≈13.6%). The trend is clear: gross margins have expanded from the low-teens toward the mid-teens as usage and product mix improve.
- Operating losses are still material but show variability with scale: operating loss Q1 2025 = -$33.4M (≈-44% margin on revenue that quarter), Q2 2025 = -$30.8M (≈-31%), Q3 2025 = -$34.1M (≈-37%). Q2 shows the best operating leverage quarter-to-quarter, demonstrating the margin runway once SG&A and operations normalize.
- Cash flow and funding: Q3 2025 operating cash flow was -$22.8M, while investing cash flow was -$26.2M and financing provided +$66.7M, leaving net cash flow +$17.8M for the quarter. That mix indicates the company still relies on financing for growth but can show positive operating cash flow in some quarters — Q2 2025 operating cash flow was +$14.1M — suggesting that operational breakeven is within reach with continued scale.
- Balance sheet: Total assets on the latest filing were $931.8M with current assets $284.7M and current liabilities $133.4M (current ratio ≈ 2.1). Long-term debt stands at $157.3M. A material caveat is a large redeemable noncontrolling interest / temporary equity item ($817.3M) that leaves equity attributable to the parent at -$428.1M. That structure complicates textbook equity valuation but does not directly impede cash generation on the core charging network if partner funding and project economics hold.
Valuation framing
The dataset does not include a market capitalization number, but the stock trades in the low-$3s (last quotes in the dataset around $3.05–$3.23 and prior-day close $3.14). Price history shows meaningful prior upside: the shares traded into the $4–5 range earlier in the last 12 months, with intraday highs over $5.00 in the most active period. That range establishes realistic short- and medium-term targets given similar sentiment reversals in the past.
Qualitatively, EVgo's valuation should be viewed as a growth-to-profitability play: if the company sustains gross margins in the mid-teens and demonstrates consistent positive operating cash flow (or materially narrows operating losses), multiples should expand from current depressed levels. The presence of substantial redeemable noncontrolling interest creates a capital structure discount today; a removal or reduction of that item — or clearer economics showing the parent company capturing more free cash flow — would meaningfully change the market's multiple.
Trade setup (actionable)
Thesis: Buy EVgo on operational momentum and the potential for an analyst rating upgrade once profitability trends are sustained.
Suggested trade (size to risk tolerance):
- Entry: 3.05–3.35 (limit buy band). Prefer staggered entries across this band; partial fill at ~3.15 and follow-up up to 3.35.
- Stop: 2.60 hard stop (about 18% below the top of the entry band). If stopped out, re-assess — not a buy-and-forget trade.
- Targets:
- Target 1 (near-term, tactical): 4.10 — aligns with recent resistance and a ~25–32% upside from entry.
- Target 2 (medium-term): 5.00 — re-test of the multi-dollar highs and a ~50–60% upside.
- Target 3 (stretch): 6.00+ — contingent on sustained operating cash flow improvement and positive guidance — use as a trim level if the company prints several straight quarters of margin gains.
Risk-reward: With a 2.60 stop from a 3.20 mid-entry, downside is ~19% while upside to our first target is ~28% and materially more to higher targets; asymmetry is attractive if the operational story continues to improve.
Catalysts to drive the trade
- Autocharge+ adoption and session growth: management announced Autocharge+ surpassed 5 million sessions and sixfold enrollment growth (12/03/2025). Continued enrollment would support recurring-session revenue.
- Sales outlook and quarterly results: management lifted sales outlook after charging revenue hit record levels (11/10/2025). Further upward revisions would force multiple expansion.
- Network expansion efficiency: planned acceleration via domestically made prefabricated charging skids (12/16/2025) could reduce install cycle time and capex per site, improving returns on invested capital.
- Commercial partnerships and route density: milestones with partners (GM, Pilot) create high-visibility long-distance charging corridors that increase utilization per site.
- Analyst/ratings improvement: sustained quarter-to-quarter margin improvement and operating cash flow could trigger a ratings upgrade, widening the investor base.
Risks and counterarguments
- Heavy temporary equity / redeemable noncontrolling interest: The company reports $817.3M of redeemable noncontrolling interest, which drives negative equity attributable to the parent (-$428.1M). That structure compresses parent-level equity value and could limit traditional valuation improvement until clarified or settled.
- Operating cash flow volatility: Operating cash flow swung from +$14.1M in Q2 2025 to -$22.8M in Q3 2025. If this volatility continues, the market may discount the business as not reliably cash-generative.
- Funding and dilution risk: The company relied on financing activity (+$66.7M in Q3 2025) to fund net cash flow. Additional financing at dilutive terms or large project co-investment terms could reduce upside for common shareholders.
- Competition and price pressure: The fast-charging market is crowded and competitive pricing or subsidy pressures could blunt margins if utilization growth stalls.
- Execution risk on scale and installs: Prefabrication and faster installs materially reduce time-to-revenue only if rollouts proceed on schedule. Delays or higher-than-expected install costs hit returns.
- Counterargument: The improvement in gross margins may be temporary or driven by one-off regional benefits or accounting timing — not sustainable operating leverage. The sizable negative net income and the irregular operating cash flow pattern support that skepticism. If subsequent quarters do not show consistent operating-cash-flow positivity and narrower operating losses, the upgrade thesis fails.
What would change my mind
- Positive signs that would increase conviction: four consecutive quarters of positive net operating cash flow; reduction in redeemable noncontrolling interest or clearer road map to convert partner-funded projects into parent cash flow; sustained gross margin >14% with operating loss narrowing below -15% of revenue.
- Negative signs that would reduce conviction: another quarter of large operating cash flow outflow compounded by dilutive financing, or clear evidence that charging-session growth has plateaued (flat or declining sessions and falling utilization per site).
Bottom line / final stance
I am constructive on EVgo as a tactical long while this mix of improving gross margins, record charging revenue and Autocharge+ adoption persists. This is a high-risk, event-driven trade: buy in the 3.05–3.35 band, apply a disciplined stop at 2.60, and use 4.10 / 5.00 as systematic targets to de-risk the position. The path to a formal rating upgrade and re-rating of the shares is clear but conditional: the company must string together consistent operating cash-flow improvement and reduce the structural discount implied by redeemable noncontrolling interest.
Trade with position sizing appropriate to a high-risk name and use the stop. If EVgo can deliver consistent operating cash flow and durable margins, the stock can re-test the $4–6 range; if not, the stop preserves capital.
Disclosure: This is not financial advice. The trade described is a tactical idea based only on the company's reported financials and public announcements.