ChargePoint Holdings (NYSE:CHPT) released its first-quarter fiscal 2022 earnings on June 3. So far, the market has reacted favorably to the quarter, which saw the company sign up a record number of customers for its EV charging network. While CHPT stock remains well below December 2020 levels, the post-earnings gain continues a rally that began in mid-May.
ChargePoint shares have staged several rallies since March, but none have been sustained.
With this latest one seeming to have legs, now might be the time to think about a CHPT stock investment if you have been on the fence.
CHPT Stock Up on Solid Q1
On June 3, ChargePoint reported its first-quarter fiscal 2022 earnings. Revenue of $40.5 million was up 24% year-over-year. In addition, the company added a record number of new customers, bringing its total to more than 5,000.
ChargePoint’s unique business model lets property owners set the rates for its chargers. This has seen some unique applications, such as retailers who may offer charging for free because it brings EV owners into their stores. The company makes its money from selling the chargers and operational support fees, but stays out of the direct billing for electricity model.
The company’s CEO is optimistic about the growing rate of adoption of EVs and what that means for ChargePoint:
The driver of our business – the electrification of mobility – continues, with over 2.3 million EVs expected to be sold in the U.S. and Europe in 2021, a year-over-year growth rate of over 40%. We expect an acceleration in our business as EV penetration increases and economies in our key markets reopen.
The market has reacted favorably, with CHPT stock popping.
ChargePoint also has a cash balance of $610 million to finance the building out of its EV charging network. That cash will be critical, because the race to expand the national charging network is on.
Opportunity: Charging Infrastructure for All Those EVs
The biggest challenge for the EV industry is the business opportunity for ChargePoint. In order for EVs to go mainstream, there needs to be a national charging infrastructure. Right now, that critical piece of the puzzle is lacking. According to the U.S. Department of Energy, there are currently 41,400 EV charging stations in the country. That pales in comparison to the estimated 136,400 gas stations.
However, EV charging stations are not a direct comparison to gas stations. A charge station may be only a single charger, where gas stations are usually multiple pumps. In addition, filling a car’s gas tank from empty might take five minutes. EVs take much longer to charge their batteries. Right now, the EV with the fastest charging rate offers 62 miles of range in four minutes with a quick charge mode. That’s using a Level 3 charger (which is rare among current charge stations), and the charge rate slows down after that initial quick charge.
The reality is it takes 30 minutes to more than an hour to fully charge the battery on most EVs. Many more charge stations will be needed to encourage EV adoption. Seeing cars waiting for their turn to use a charger only adds to the anxiety of potential EV buyers. Carnegie Mellon University associate professor of civil and environmental engineering Costa Samaras sums up the issue:
The amount of stations has to outpace the number of cars, so the next person can feel confident that they can buy an EV.
President Joe Biden is planning to spend big on EVs. That includes recognition of the need for many more public charge stations. It’s reported that the administration is earmarking $15 billion for incentive in the building of charge stations. The total cost to install the needed number of EV chargers in the U.S. is closer to $50 billion.
That’s a lot of spending in play for a company like ChargePoint.
Bottom Line on CHPT Stock
An investment in ChargePoint is an investment in EV stocks, without having to pick an EV manufacturer. Instead, it’s putting your money on the infrastructure that all EVs will need. The company’s unique business model has fans in the investment world. The investment analysts polled by CNN Business have CHPT stock rated as a consensus buy with a median $38 price target. That’s a healthy, 38% upside.
ChargePoint currently has a “B” rating in Portfolio Grader. If you want to get in on the rush to electrify America’s transportation network, but prefer to focus on the infrastructure, CHPT stock offers opportunity.
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.