ChargePoint Stock Is Sinking. Earnings Fell Short.

ChargePoint Stock Is Sinking. Earnings Fell Short.

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A ChargePoint charging plug sits connected to an electric vehicle at a station in Los Angeles.

Dania Maxwell/Bloomberg

Shares of EV-charging company


ChargePoint Holdings

were falling Wednesday after it boosted revenue guidance but reported a fiscal third-quarter loss wider than a year earlier.

The loss might not be why shares were falling. Investors appeared to be stuck in a policy and competition loop, but the company’s CEO told Barron’s why competition is less of a concern than investors might think.

ChargePoint (ticker: CHPT) fell 6.5% to $20.36 on Wednesday. The

S&P 500
and

Dow Jones Industrial Average
are up 0.1% and down 0.2%, respectively.

On Tuesday, ChargePoint posted a quarterly loss of $69.4 million, which was wider than analysts’ estimates and a year-earlier loss of $40.9 million. Revenue in the quarter rose 79% to $65 million, at the high end of the company’s guidance. Adjusted gross margin in the quarter was 27% vs. 20% in the year-earlier period.

ChargePoint said it had activated ports of about 163,000 as of Oct. 31, with about 45,000 in Europe.

ChargePoint stock, nonetheless, has been in a rut. Shares are down 27% over the past month. Earnings have nothing to do with the decline; instead investors are waiting for the Build Back Better infrastructure bill—which includes EV incentive—to pass. In the meantime, investors have been deluged by a number of EV charging companies, raising concerns about competition.

ChargePoint is the most valuable of the publicly traded EV-charging stocks, a group that includes


EVgo

(EVGO) and


Volta

(VLTA), as well as SPAC companies that have yet to finish merging with EV-charging companies.


Spartan Acquisition Corp III

(SPAQ), for instance, is merging with European EV-charging infrastructure provider Allego. IONITY, an EV-charging company that isn’t publicly traded yet, was recently in the news because of a new partnership with


Ford Motor

(F) and other auto makers.

ChargePoint CEO Pasquale “Pat” Romano told Barron’s that the Build Back Better bill “doesn’t address the primary use case of charging.” He doesn’t mind government support, but says it takes a long time to go from policy to implementation. The bill isn’t what will fuel EV-charging growth.

“IONITY is a customer,” points out Romano, as he battles perception of competition. ChargePoint doesn’t operate EV-charging infrastructure; it wants to sell the best EV-charging management software to companies like IONITY.

EVs as mainstream vehicles are still new. That means investors still have a lot to figure out. That can be an opportunity as stocks remain volatile early in an industry’s trading history.

Wall Street, for its part, likes ChargePoint just fine. Overall, 61% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for small capitalization stocks is about 65%.

Evercore analyst James West rates share Buy, with a price target is $34 a share. He didn’t think the quarter was problematic, despite the stock drop. ChargePoint “enjoys differentiated scale as a first mover in EV charging and a strong market share position in the U.S. and Europe,” the analyst wrote in a note. “We continue to believe the company is viewed as an index for charging and investors look to it first for exposure to the sector given its scale, transatlantic reach, and role as the ‘arms dealer’ for the industry.”

J.P. Morgan analyst Bill Peterson called results solid in a report, noting that profit margins were ahead of Wall Street expectations. Peterson is Hold rated, with a price target of $26 a share.

For the fourth quarter, ChargePoint said it expects revenue of $73 million to $78 million. Fiscal-year revenue was forecast at $235 million to $240 million, above its previous guidance of $225 million to $235 million. 

Read more: EV-Charging Stocks Have Surged. Increased Price Targets Hadn’t Kept Pace.

Write to Joe Woelfel at joseph.woelfel@barrons.com

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