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ChargePoint Stock: Don’t Get Too Charged Up
Stock Analysis & Ideas

ChargePoint Stock: Don’t Get Too Charged Up

Story Highlights

It might be tempting to jump on the vehicle electrification movement with ChargePoint stock, but be sure to get the full fiscal picture first. As some of the stats will reveal, ChargePoint’s growth prospects may be stuck in neutral.

California-headquartered ChargePoint (CHPT) operates electric vehicle (EV) charging stations. I am neutral on the stock.

The vehicle electrification movement is here, and it’s here to stay. With more EVs expected to crowd the roadways in the coming years, the demand for charging infrastructure should grow. This vision of an electrified future has undoubtedly enticed some ChargePoint stock traders into a long-term investment.

Over the past year, however, that investment hasn’t been profitable. As we’ll see, ChargePoint stock has declined substantially, and shareholders could certainly use some positive data at this point.

There is, indeed, some positive data for the bulls to get excited about. On the other hand, that excitement should be tempered, as not all of ChargePoint’s stats will offer encouragement. Understandably, the company’s CEO has emphasized the positive points, but informed investors must weigh all of the relevant facts – including analysts’ opinions, which point to upside potential in some cases.

Strong in Some Areas

It’s perfectly normal for executives of a company to focus on its accomplishments and generally cast the company in the best possible light. So, it’s not too surprising for ChargePoint President and CEO Pasquale Romano to say, “Positive first-quarter results, despite expected significant headwinds due to global supply constraints, are a testament to the strength of our business.”

Were ChargePoint’s first-quarter FY2023 results “positive,” though? Its investors should hope so, as ChargePoint stock could definitely use a boost. The shares touched $36.86 at one point during the past 12 months but are now trading at $14 and change. It’s undoubtedly disappointing for anyone who bought in the $30s and is now waiting to get back to breakeven.

With this in mind, it’s not an exaggeration to say that ChargePoint latest results were high-stakes for the shareholders. They need a turnaround before the situation gets worse – so did ChargePoint deliver as Romano suggested it did?

The answer depends on which numbers you’re looking at. Certainly, there are top-line results that tend to support the CEO’s optimistic contention. In particular, ChargePoint recorded first-quarter FY2023 revenue of $81.6 million, up 102% year over year. This result beat the analysts’ consensus estimate of $75.7 million and was also above the range of $72 million to $77 million, which ChargePoint’s management had expected.

Furthermore, in Europe, ChargePoint grew its revenue 67% on a quarter-over-quarter basis. In addition, the company optimistically projects FY2023 revenue in the range of $450 million to $500 million. If a trader only looked at these facts, then Romano’s “positive” stance would seem entirely justified. Don’t jump to any conclusions yet, though, as there are two sides to every story.

Swinging to a Loss

So far, I’ve highlighted ChargePoint’s top-line quarterly results, which were certainly impressive. It’s hard to argue with 102% revenue growth – no doubt about that.

What about the bottom-line results, though? These are often considered to be just as important as the top-line results and perhaps even more important. Unfortunately, in this area, ChargePoint didn’t provide much for the bulls to get excited about.

During Fiscal 2023’s first quarter, ChargePoint incurred a GAAP net loss of $89.3 million. That’s a disappointing result, as the company had reported a net profit of $82.3 million in the year-earlier quarter. Also, in its press release, ChargePoint did not provide GAAP net earnings guidance for Q2 or for full-year FY2023.

Besides, this wasn’t the only sticking point. ChargePoint also reported $12.1 million in quarterly gross profit, which missed analysts’ consensus of $17.3 million. In other words, the bears can construct a strong argument just like the bulls can.

When a company’s results are mixed, analysts can help retail investors to make sense of it all. For example, Stifel Nicolaus analyst Stephen Gengaro observed that ChargePoint’s “margins were adversely affected by nine percentage points from supply chain issues.” This could help to account for the company’s underperformance in its quarterly bottom-line results.

Bearing this in mind, Gengaro assigned ChargePoint stock a Buy rating along with a price target of $32. This implies considerable upside potential for the stock.

Meanwhile, J.P. Morgan analyst Bill Peterson also issued a Buy rating on ChargePoint stock, though his price target was much lower, at $18. Peterson observed that ChargePoint’s backlog of orders was up 35% on a quarter-over-quarter basis.

Wall Street’s Take

Turning to Wall Street, CHPT has a Strong Buy consensus rating based on seven Buys and four Hold ratings assigned in the past three months. The average Chargepoint price target is $20.41, implying 40.1% upside potential.

The Takeaway

It’s difficult to form a firm conclusion when it comes to ChargePoint stock now. The share price is down, yet the company doubled its revenue year over year. Also, ChargePoint’s CEO seems optimistic, but the company swung from a net gain to a loss.

If you’re not currently invested in ChargePoint stock, it’s perfectly fine to stay on the sidelines and adopt a wait-and-watch strategy for the time being. Hopefully, the company’s bottom-line results will move back in the right direction in the upcoming quarters.

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