CHPT Stock Set to Rise Because of Deal With Mercedes-Benz
I’m not going out on a limb by saying that 2022 was miserable for stocks. The S&P 500 ended the year down by approximately 20%, and the Nasdaq went down by an eye-popping 32.5%.
One sector of the stock market that was hit particularly hard was the electric vehicle (EV) industry. The Global X Autonomous and Electric Vehicle ETF (NASDAQ:DRIV) lost 53.5% of its value in 2022.
EV stocks, along with other stocks, have taken a hit as a result of rising interest rates and stubbornly high inflation. EV-related stocks are being weighed down by the slow adoption of EVs. Sales of EVs have been growing, but not as aggressively as initially projected. It’s safe to say the COVID-19 pandemic and ensuing economic headwinds are at least partly to blame.
That doesn’t mean the EV industry is sitting idle, waiting for the economy to improve. There are many excellent EV companies doing great things.
One of the more interesting EV-related companies is ChargePoint Holdings Inc (NYSE:CHPT). It’s not a pure-play EV company, but it’s the kind of company that keeps EVs rolling. ChargePoint is the largest EV charging network company in the U.S., and it has been expanding its charging network in Canada and Europe.
ChargePoint Holdings Inc has inked deals with other companies to maintain its charging network dominance.
ChargePoint recently announced that it’s joining with Mercedes Benz Group (FRA:DAII, OTCMKTS:MBGYY) and MN8 Energy to rapidly expand the availability of EV fast chargers in the U.S. and Canada. The plan is to install 400 EV charging hubs with more than 2,500 charging ports. (Source: “ChargePoint and Mercedes-Benz Enhance Driver Experience With Fast Charging Network in North America,” ChargePoint Holdings Inc, January 5, 2023.)
MN8 Energy is one of the largest U.S. solar, stationary power, and renewable energy providers.
The EV charging hubs will be in key cities and urban centers, along major highways, and close to retail and service destinations. The charging ports will be available to all EV drivers, but Mercedes-Benz owners will be privy to additional benefits.
The project’s cost of approximately $1.0 billion will be split 50/50 between Mercedes and MN8.
Aside from increasing its international footprint, ChargePoint Holdings Inc has reported superb financial results and hiked its full-year guidance.
Despite the wonderful things happening at ChargePoint Holdings Inc, its share price hasn’t exactly been following suit. As of this writing, ChargePoint stock is down by:
- 18% over the last month
- 43% over the last three months
- 48% year-over-year
Wretched numbers, but the outlook for CHPT stock is robust. Analysts have provided a 12-month share-price target for ChargePoint Holdings Inc in the range of $19.38 to $28.00. This points to potential upside in the range of approximately 115% and 211%.
Chart courtesy of StockCharts.com
About ChargePoint Holdings Inc
ChargePoint has one of the largest EV charging networks in the world. It has more than 211,000 activated charging ports in North America and Europe.
The company has more than seven times the market share for networked Level 2 chargers than its closest competitor in North America. It also has operations in 16 European markets. (Source: “Driving the Electrification of Mobility: December 2022,” ChargePoint Holdings Inc, last accessed January 11, 2023.)
ChargePoint’s market share is seven times greater than its closest North American competitor. It has more than 5,000 commercial and fleet customers, including 80% of the Fortune 50 companies.
ChargePoint Holdings Inc’s network has undertaken more than 133 million EV charging sessions, with drivers plugging into the network on average every second.
This is just the beginning.
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 51%.
Another Quarter of Revenue Growth Exceeding 90%
For the third quarter of fiscal 2023 (ended October 31, 2022), ChargePoint announced that its total revenue jumped by 93% year-over-year to $65.0 million. Its networked charging systems revenue went up by 105% to $97.6 million and its subscription revenue advanced 62% to $21.7 million. (Source: “ChargePoint Reports Third Quarter Fiscal Year 2023 Financial Results,” ChargePoint Holdings Inc, December 1, 2022.)
The company reported a third-quarter net loss of $84.5 million, compared to a net loss of $69.4 million in the same period of fiscal 2022. Its adjusted net loss in the third quarter was $56.4 million, compared to $47.3 million in the same prior-year period.
ChargePoint Holdings Inc ended the third quarter of fiscal 2023 with cash and short-term investments of $397.6 million.
“ChargePoint delivered another quarter of growth exceeding 90% year-over-year, as we continue to scale the business to meet strong demand for our solutions across North America and Europe,” said Pasquale Romano, ChargePoint Holdings Inc’s president and CEO.
He added, “Our networked, asset-light business model continues to enable our growth as we strive to deliver improved margins and operating leverage.” (Source: Ibid.)
For the fourth quarter of fiscal 2023, which ends on January 31, ChargePoint expects to report revenues in the range of $160.0 to $170.0 million. At the midpoint, this represents a year-over-year increase of 108%.
For its full fiscal 2023, ChargePoint Holdings Inc expects to report revenues in the range of $475.0 to $485.0 million. At the midpoint, this represents a year-over-year increase of 98%.
ChargePoint Holdings Inc operates the largest EV charging network in North America, and its addressable market has been growing every quarter. The company reported another quarter of high revenue growth and increased the midpoint of its full-year guidance.
EV stocks have been getting hammered, but ChargePoint is doing everything it needs to do to be prepared for when the stock market bottoms and investor sentiment returns.