Why Investors Should Watch ChargePoint Holdings Inc

Electric vehicle (EV)-related companies, especially EV manufacturers, are still experiencing growing pains.

Canoo Inc (NASDAQ:GOEV), Electric Last Mile Solutions Inc (OTCMKTS:ELMSQ), Faraday Future Intelligent Electric Inc (NASDAQ:FFIE), Lordstown Motors Corp (NASDAQ:RIDE), Lucid Group (NASDAQ:LCID), Nikola Corp (NASDAQ:NKLA), and Rivian Automotive Inc (NASDAQ:RIVN) have all experienced delays and obstacles to producing their first vehicles.

While EV manufacturers continue to work out the kinks, one area that's been experiencing tremendous growth is the EV infrastructure sector. A record number of EVs are being sold every year, and to get those cars moving, they need juice. That's why EV charging stocks are some of the most compelling EV stocks going these days.

ChargePoint Holdings Inc (NYSE:CHPT) has one of the largest charging networks in the world, with more than 188,000 activated charging stations in North America and 16 European markets. (Source: “Investor Presentation: June 2022,” ChargePoint Holdings Inc, last accessed July 29, 2022.)

The company has seven times more market share for networked level 2 charging than its closest rival in North America. ChargePoint has about 5,000 commercial and fleet customers, including 78% of the Fortune 50 companies. (Source: "Corporate Overview," ChargePoint Holdings Inc, last accessed July 29, 2022.)

This is just the beginning, though.

ChargePoint Holdings Inc’s growth is directly proportional to EV sales. Between 2020 and 2026, passenger EV sales are expected to advance at a compound annual growth rate (CAGR) of 41%.

Just recently, the company announced a partnership with the organization Charge Across Town and the State of California to deploy hundreds of EV chargers at multifamily residences such as apartment buildings and condominiums across the state. (Source: “ChargePoint and Charge Across Town Partner With California Energy Commission to Build Hundreds of EV Chargers at Apartment Buildings and Condo Complexes Across the State,” ChargePoint Holdings Inc, July 27, 2022.)

Through the project, the residents living in these multifamily buildings are expected to drive over 2.7 million electric miles in the five years after the chargers are installed. This will eliminate more than 1.1 million metric tons of carbon dioxide equivalent, which is equal to planting more than 18 million trees and growing them for a decade.

In addition to providing networked charging stations for residential, commercial, and fleet customers, ChargePoint Holdings Inc sells hardware, subscription software, and services (parts and labor).

Its rapidly growing customer base includes FedEx Corporation (NYSE:FDX), Lyft Inc (NASDAQ:LYFT), Microsoft Corporation (NASDAQ:MSFT), PepsiCo, Inc. (NYSE:PEP), and Target Corporation (NYSE:TGT).

Share-Price Performance

There are many great things going on at ChargePoint Holdings Inc, but you’d never know it if you judged the company by its share price. As of this writing, CHPT stock is down by:

• 15% over the last month
• 32% year-to-date
• 43% year-over-year

Grim numbers, but that slide can be blamed on the broader stock market sell-off that has been fueled by rising interest rates, surging inflation, and fears of a recession.

Chart courtesy of StockCharts.com

Those headwinds will pass. It might not take very long, either.

Of the analysts providing a 12-month share-price forecast for ChargePoint Holdings Inc, their average target is $19.13 and their high estimate is $26.00. At the current price of ChargePoint stock, this represents a potential upside range of 47% to 101%.

Q1 Revenue Up 102%; Management Confirms Guidance

For the first quarter of fiscal 2023 ended April 30, 2022, ChargePoint announced that its revenue jumped by 102% year-over-year to $81.6 million. (Source: “ChargePoint Reports First Quarter Fiscal year 2023 Financial Results,” ChargePoint Holdings Inc, May 31, 2022.)

The company's networking charging systems revenue climbed by 122% to $59.6 million, while its subscription revenue went up by 63% to $17.6 million.

ChargePoint Holdings Inc achieved record growth in Europe, with 67% sequential quarterly revenue growth. The company ended the quarter with more than 188,000 active ports under management, with 57,000 of those in Europe.

ChargePoint Holdings Inc reported a first-quarter net loss of $89.3 million, or $0.27 per share. The loss included a $2.9-million amortization expense from acquired intangible assets and $15.5 million in stock-based compensation expenses.

ChargePoint Holdings Inc's adjusted net loss for the first quarter was $71.7 million, compared to $39.4 million in the prior year's same quarter. The company ended the first quarter with a cash balance of $541.0 million.

For the second quarter of fiscal 2023, ChargePoint expects to report revenue between $96.0 and $106.0 million, which at the midpoint represents a year-over-year increase of 80%.

For the fiscal year ending January 31, 2023, ChargePoint Holdings Inc forecasts revenue between $450.0 and $500.0 million, which at the midpoint represents a year-over-year increase of 96%.

Analyst Take

ChargePoint Holdings Inc operates the largest EV charging network in North America, and thanks to record EV sales, the company's addressable market has been growing every quarter.

The company reported another quarter of high revenue growth, reflecting momentum across all of its verticals. ChargePoint Holdings Inc also reaffirmed its projection of second-quarter revenue growth of 80% and full-year revenue growth of 96%.

Therefore, investors might want to look closely at CHPT stock.