Is ChargePoint Stock Worth Investing In?
Anyone who has driven an electric vehicle is probably familiar with ChargePoint stock and the plus sign that is seen throughout its branding. The plus sign, in this case, refers to positive and negative charges. ChargePoint is the largest charging network in the world.
Electric vehicles are generating a lot of interest from investors these days as a slew of new EVs hits the market. And with more EVs in development, the demand for charging will inevitably increase. Since ChargePoint is the largest network, it’s naturally attractive to those looking to invest in EVs and charging infrastructure.
However, there are some risks facing the company, and we must take a closer look before deciding whether ChargePoint stock is a buy.
What is ChargePoint (NYSE: CHPT)?
Founded in 2007, ChargePoint has over 114,000 charging locations in operation as of September 2020. If you include stations with roaming integrations, the number comes to 133,000. And while that is the latest figure, ChargePoint continues to expand rapidly and the number will likely be much higher before long.
ChargePoint headquarters is located in Campbell, California. It operates in 14 countries including the U.S., Mexico, Canada and Australia.
ChargePoint stock went public in late 2020 and is now available on the New York Stock Exchange. Its IPO was the result of a special purpose acquisition (SPAC) in which it merged with Switchback Energy Acquisition Corporation.
Quarterly Financials
The most recent earnings call for ChargePoint paints an interesting picture. Its revenue was up 61% year-over-year, bringing in $56 million for the quarter. However, net income was down 141% YoY, for a net loss of $85 million. Diluted EPS was up nearly 96% but was negative at 0.29. Both operating income and net profit margin were down YoY, at -50% and -216%, respectively. Those two figures came in at -$74 million and -151%.
Overall, this quarter was not the best for ChargePoint. Although its revenue and EPS saw YoY increases, it saw decreases in all other areas. And while EPS increased, it was still negative overall. The previous quarter was much better for ChargePoint as every area except operating income had YoY increases at that point.
As for EPS and revenue predictions, it has beat revenue predictions while missing EPS projections in each of the last three quarters. Thus, ChargePoint stock isn’t having trouble bringing in revenue, but profitability remains a pain point.
Investor Sentiment
Although there are some risks for ChargePoint, investors are actually quite bullish on CHPT. In fact, various analyses show there is a bullish outlook for the stock in the short, mid, and long term. All of this is despite the fact that Fidelity, for instance, rates the stock as highly overvalued, with a 3 out of 100, where 1 is the most overvalued and 100 is the most undervalued.
However, that same analysis does give it a 95 out of 100 for growth stability, and this could be what is encouraging to investors. After all, we discussed earlier how ChargePoint continues its rapid expansion, including to other countries. If profits increase when charging infrastructure becomes more saturated, things could look quite good for ChargePoint stock investors.
ChargePoint Stock Predictions
In addition to its struggles to maintain profitability, some analysts point to a risk of commoditization in charging infrastructure. Think of it like gas stations: when filling up a gas-powered car, most of us would simply visit whichever gas station has the lowest price per gallon. EV charging could follow a similar path which would make it difficult for ChargePoint to maintain its market dominance.
All of these things being considered, ChargePoint stock is a moderate buy but not necessarily a home run. Its stock price saw a peak in late December of 2020 at over $45 per share. Since then, the price dropped below $20 per share, though it has increased to nearly $27 per share since a low point in October 2021.
Again, we see a mixed bag with ChargePoint. It is never encouraging to see a stock lose more than 50 percent of its value, but the plus side is that it has been increasing since early October. In fact, it is up another 50 percent compared to its October low point.
Thus, we can expect ChargePoint to continue its modest rise while keeping in mind the potential risks the company faces. It is still the largest charging network in the world, and that is a big advantage for it.
Is ChargePoint Stock a Buy?
To decide whether ChargePoint stock is a buy, you will have to decide whether you want to invest in charging infrastructure more generally. While ChargePoint has some potential risk factors, it is nonetheless the largest charging network in the world. Chargepoint is often compared to charging networks, such as Blink and EVgo. However, ChargePoint stock is as good or better in terms of investment opportunity. The market isn’t much more bullish around the other two, and neither are analysts. Of course, the other option is EV stocks, many of which are also good investments.
But if you want to invest in EV charging specifically, ChargePoint is a good choice. Plus, the U.S. is finally starting to embrace EV charging, allocating $7.5 billion of the recent infrastructure bill to build out charging stations.
On the other hand, if you are simply looking for the next winning stock and are not particularly interested in EV charging, then ChargePoint may not be the best choice. While it may continue its modest rise, the potential for commoditization in EV charging may hurt its long-term growth.
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Simply put, it depends on what is important to you and what your investment goals are. Once you have answered those questions, it won’t be difficult to decide if ChargePoint stock is a buy.
About Bob Haegele
Bob Haegele is a personal finance writer who specializes in investing and planning for retirement. His hefty student loan burden inspired him to pay off his loans, and now he’s helping others get their finances in order. When he’s not writing, he enjoys travel and live music.