I am neutral on ChargePoint (CHPT) as it has a promising long-term growth runway, Wall Street analysts are overwhelmingly bullish on the stock, and the average price target implies substantial upside over the next year.
That said, the company is far from profitable and faces potential competitive threats in the coming years.
ChargePoint is a network of open EV charging stations. The company provides cloud-based service packages as an annual subscription. It further provides its customers with different services like driver support, data, and payment processing.
The company serves utilities, corporations, shopping centers, parking service providers, and municipalities worldwide. Since 2007, the company has been committed to making the transition to a fuel-free lifestyle easy for various businesses and drivers.
Today, by getting one ChargePoint account, you can have access to thousands of places in Europe and North America. The company claims that more than 98 million charging sessions have been claimed up till now.
Strengths
Apart from offering a wide range of charging services, CHPT also has a firm stance towards merger and acquisitions. Recently, it completed the acquisition of Energised which is an industry leading EV charging software platform.
This acquisition was quickly followed by an acquisition of ViriCiti, which is a leading electrification solution provider. Moreover, ChargePoint has also grown to become the biggest charging network in Europe and North America, since it has more than 150,000 ports accessible on its network.
It has continued to create several job opportunities and has doubled its staff size in Europe.
Recent Results
In ChargePoint’s third quarter, it managed to earn revenues of $65 million, a 79% increase from its earnings in the same quarter last year ($36.4 million).
Its network charging revenue for the revenue was $47.5 million which is a 111% increase from $22.6 million. When the third quarter ended in October, 2021, it had 331 million common stock shares outstanding and in Q4, it is expecting an increase in revenue. The range quoted is $73 million to $78 million.
Valuation Metrics
CHPT stock is difficult to value is not profitable, trades at a high valuation multiple, and is growing rapidly.
That said, it trades at an enterprise value-to-revenue ratio of 14.3 times and expects to see revenue grow by 62.2% in 2022 and 59.3% in 2023.
Wall Street’s Take
According to Wall Street analysts, CHPT earns a Moderate Buy analyst consensus based on six Buy ratings, three Hold ratings and zero Sell ratings in the past three months. Additionally, the average ChargePoint price target of $23.90 puts the upside potential at 101.5%.
Summary and Conclusions
ChargePoint is an early leader poised to experience rapid and long-term growth in an innovative industry. If the company can scale quickly and establish an early network advantage, it could then generate strong economies of scale and profitability, thereby rewarding shareholders with strong returns.
On top of that, Wall Street analysts are generally bullish on the stock and the average price target implies tremendous upside potential over the next year.
That being said, the company is far from profitable and operates in a highly fluid industry where numerous competitors are striving to gain the upper hand.
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