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Inside ChargePoint’s Newly Added Risk Factors

California-based ChargePoint Holdings (CHPT) operates electric vehicle charging stations in America and Europe. It recently acquired has-to-be and ViriCiti to enhance its solutions. The company said that has-to-be provides EV charging software platforms that address the current charging challenges in Europe and that the acquisition will bolster its position in the European market.

ChargePoint’s earnings report shows revenue increased 79% year-over-year to $65 million in Fiscal Q3 2022, ended October 31. The company posted a loss per share of $0.21, which missed the consensus estimate of a $0.13 loss per share but narrowed sharply from the $3.11 loss per share reported in the same quarter last year.

ChargePoint ended Q3 with no long-term debt and had $365.9 million in cash after using $210 million on the has-to-be and ViriCiti acquisitions.

It expects Q4 revenue to come in the range of $73 million to $78 million. For full-year Fiscal 2022, the company raised its revenue outlook to a range of $235 million to $240 million. It previously anticipated revenue in the band of $225 million to $235 million.

With this in mind, we used TipRanks to take a look at the newly added risk factors for ChargePoint.

Risk Factors 

According to the new TipRanks Risk Factors tool, ChargePoint’s main risk category is Finance and Corporate, representing 56% of the total 94 risks identified for the EV stock. The company recently updated its profile with 10 new risk factors.

ChargePoint informs investors that acquisitions are part of its business strategy. However, it mentions that identifying great businesses to acquire may be difficult. It goes on to caution that integrating acquired businesses may require significant resources that could divert management’s attention and disrupt ongoing operations. Furthermore, the company cautions that the acquired businesses may not deliver the anticipated benefits as a result of regulatory issues or its due diligence failing to identify shortcomings of the acquired businesses. The company warns that its financial results and stock price may be adversely affected if an acquisition fails to live up to expectations.

ChargePoint tells investors that some of its products rely on open-source software and code libraries. The company cautions that disputes leading to lawsuits may arise from its use of such materials, and it may be forced to stop offering products that contain the disputed code. Furthermore, ChargePoint cautions that the use of open-source materials may force it to reveal the source code of its proprietary software to third-parties, which could decrease its competitive advantage and cause its sales to decline.

The Finance and Corporate risk factor’s sector average is 34%, compared to ChargePoint’s 56%. ChargePoint’s stock has declined about 52% year-to-date.

Analysts’ Take

Cowen & Co. analyst Gabriel Daoud recently reiterated a Buy rating on ChargePoint stock with a price target of $37, which suggests 93.41% upside potential. Cowen has identified ChargePoint as a top EV charging pick for 2022.

Consensus among analysts is a Moderate Buy based on 6 Buys and 4 Holds. The average ChargePoint Holdings price target of $30.22 implies 57.97% upside potential to current levels.

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