Fastned Grows Too Fast

(Readers be warned, this article contains some “tongue in cheek” lines)

Last Tuesday, Oct. the 11^th, Fastned published its 3^rd quarter results. The slides are here, and the webcast is available for replay here. As preparation, I visited some investor advice sites.

That was probably a stupid thing to do. They did not really know what kind of company Fastned was. Based on some modest growth projections from analysts (too conservative in my eyes), the conclusion was that to realize those projections, a CAGR of between 90% and 100% was needed, something completely impossible as every investor knows.

When looking at the results over the first 3 quarters in euros, the growth was easy to dismiss while pointing at inflation and exploding energy prices. Oh, and we did also still have some headwinds from Covid-19 last year. The growth from €7,571,000 to €22,688,000 was just a fluke. Who growths at 200%? No right-minded analysts expects the 2021 revenue of €12,471K to triple to over €37,500K. Never mind that that is what the spreadsheet of this non-analyst is predicting.

Okay, the first quarter of 2021 was still a bit depressed, but the second and third were back to normal. Looking at the sales volume instead of revenue, we see a completely different picture. In kWh delivered, the growth YoY for the second quarter was 175% and the third only 149%. Without inflation, energy price crises, or Covid-19 distortions, we are still way above the impossible CAGR of close to 100%. That picture of volume growth is not so different from the revenue growth picture.

The only explanation must be that Fastned grows way too fast. Every sensible stock analyst will come to this conclusion. Only, this is also the growth speed from before Covid-19. And it is in the business plan — not a mistake or a fluke.

The Fastned growth multipliers. B. The share of BEVs on the roads, growth from ~2% now to >25% in 2030 and >98% in 2050. C. With more BEV drivers not able to charge at home and new cars now able to charge faster, more use of DC fast charging. D. More stations with more chargers each.

The question is whether this is sustainable. And Fastned has a very convincing answer to that question. No, it is not, there is a ceiling to Fastned’s growth. Fastned will reach that ceiling in a decade or two, or perhaps three decades. Yep, that ceiling is a long way off. As long as the number of electric cars from the current 2% that passes Fastned’s stations keeps growing, the sales can keep growing. As long as Fastned can open new stations, can place more chargers at existing stations, sales keep growing. As long as there are more countries to extend the network to, the ceiling is not in sight.

The same is true for all competing charging companies. Ionity, Shell Recharge, Tesla Supercharging, GreenWay, and all those other charging companies have the same opportunity. Because all electricity tastes the same, the only way to compete is on service, customer satisfaction, uptime, location, and all those other hard-to-quantify KPIs. As an EV driver, I like more and better charging stations all over Europe, or the world even. As a Fastned shareholder, I have a stake in this.

This is what I learned listening to the Fastned Q3 earnings call: Fastned keeps growing, and keeps growing faster. After 26 new stations in the first 3 quarters, another 40+ stations are ready to be opened in Q4.

Opening a new station costs 9 months to over 2 years. Only the last 3–4 weeks do the shovels get into action. The rest of the time is needed to make it shovel ready, cut red tape, sit on the waiting list for a network connection. This explains why only about half the costs of a new station appear as CAPEX on the balance sheet. The rest are development costs that are directly put on the profit and loss account.

To finance this fast growth, Fastned just got another €75 million from an investor. Schroders Capital was willing to pay €36.90 for just over 2 million shares. This enables Fastned to build another 100 or more stations along European highways.

No news on the new country organizations in Poland, Denmark, Italy, Ireland, Spain, or Portugal. Fastned is looking for people who can add these countries to their network. I am retired and was never much of a manager. Besides, I am Dutch. If you are not like me in any way, if you like a challenge and are in for a career move, please help them make me rich. 😉