If you ever wanted an example of investors being completely unreasonable, take a close look at ChargePoint (NYSE:CHPT) stock these days.
ChargePoint is in the red-hot business of electric vehicles (EVs). The company recently went public thanks to a merger with special purpose acquisition company Switchback Energy Acquisition. It became one of the latest darlings of the SPAC craze that took over Wall Street in recent months.
To top it all off, ChargePoint issued guidance before it went public for 2021 revenue, and then issued quarterly earnings that reaffirmed that guidance.
Reaffirmed. As in, things are going exactly as the company had predicted.
But the market punished CHPT stock, hard. As in, a drop of nearly 30% in recent weeks.
Does that really make any sense? Not in my book.
ChargePoint Stock at a Glance
First, let’s take a look at those earnings numbers. ChargePoint posted its first quarterly earnings statement as a publicly traded company on March 11.
Revenue for the fourth quarter came in at $42.4 million, a slight drop from $43.2 million in the fourth quarter of 2019. Losses were at $33.6 million, which also was a slight increase from a year ago when the company lost $32.5 million.
For the full year, ChargePoint said it brought in $146.5 million in revenue, an increase from $144.5 million in 2019. The loss for the year was $117.8 million, which was a decrease from $129.9 million in 2019.
Cash on hand at the end of the year was $145 million, although ChargePoint said that increased to $615 million by Feb. 26.
Before the company went public, ChargePoint said it estimated revenue in 2021 of $198 million. So, it shouldn’t be a surprise that ChargePoint, in its March 11 earnings release, guided for 2021 revenue of between $195 million and $205 million.
In fact, that guidance can be seen as an improvement over its previous estimate. That’s because the midpoint of the new guidance, $200 million, is higher than the $198 million that ChargePoint previously forecast.
But the market had other ideas. CHPT stock was at more than $30 per share when earnings were released but have dropped steadily ever since. CHPT stock is now just over $20 per share, or a drop of nearly 30%.
For the year, ChargePoint is down roughly 50%.
There’s a Great Opportunity
Despite the drop, I still think there’s a lot to like about ChargePoint stock right now.
First, the electric vehicle market is growing fast, which means there’s a lot of money to be made with the right EV stocks. The Brattle Group recently suggested that the number of EVs in the U.S. could increase to 35 million by 2030. That’s not far off at all.
ChargePoint is a play on the infrastructure that makes EVs go. The company already operates that largest online network of independent EV charging stations in the world. The California-based company plans to grow its network of EV charging stations and the network software that runs them.
How big is the opportunity? The Brattle Group says the U.S. will need more than 2 million more public charging stations by 2030 if its estimate of 35 million EVs holds true.
Moreover, the U.S. is planning a massive infrastructure effort as part of its $3 trillion economic spending package. Considering President Joe Biden’s commitment to clean energy, it’s logical to assume that part of any infrastructure effort will include clean transportation and EV charging stations.
The Bottom Line
Investors can be a pretty tough audience. ChargePoint is already a leader in the EV space. It forecast a 37% increase in revenue for this year that was already in line with its previous predictions.
I can understand some skepticism if ChargePoint had lowered its estimates. But to trash CHPT stock just because 37% growth isn’t good enough seems short-sighted to me.
Now down 30% from its recent highs, ChargePoint stock is a great value right now. It has a “B” grade in my Portfolio Grader, where it carries a buy recommendation.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.