I love it when there’s a mismatch between a stock’s price and the intrinsic value of a company. A case in point would be ChargePoint (NYSE:CHPT), as CHPT stock has deteriorated yet the company is firing on all cylinders.
As you may be aware, President Joe Biden’s administration aims to have 50% of all new passenger vehicle sales in the U.S. be electric vehicles by 2030. If this comes true, then electric vehicle chargers will be in very high demand.
To quote Bank of America analyst Martyn Briggs, this will require “huge amounts of battery manufacturing in particular.” The implication, I assume, is that charging stations will pop up here, there and everywhere.
At the same time, CHPT stock has been on a persistent downtrend since July. It’s frustrating as the electric vehicle battery market’s set to explode and ChargePoint is growing in more ways than one – but then, this could be a setup for a prime buying opportunity.
A Closer Look at CHPT Stock
At the end of June 2021, CHPT stock was riding high at $35 and the bulls seemed unstoppable. However, this rally wasn’t meant to last.
Painfully, the share price dropped to $25 in July, and then slumped to $20 at the end of September. By Oct. 6, it was down to just $18.
In other words, CHPT stock was nearly cut in just a few months’ time. This might seem shocking, but it’s to be expected if you’re investing in an emerging technology such as electric vehicle battery chargers.
So, the bulls should be realistic. Don’t expect the ChargePoint share price to regain $35 in the coming months – unless the company’s next earnings report is an absolute blockbuster.
That won’t happen for a while, though, so sit tight and remember what got you interested in ChargePoint in the first place. To help you stay motivated and invested, we’ll cover the company’s notable recent expansion – both regionally, and fiscally.
Charging into Europe
While CHPT stock trades on the New York Stock Exchange, the company’s vision extends beyond U.S. borders.
Very recently, ChargePoint announced its acceleration into the European electric vehicle market with the completed acquisition of has·to·be.
That company is the provider of be.ENERGISED, a cloud-based e-mobility electric vehicle charging and enterprise software platform.
With the has·to·be acquisition, ChargePoint can potentially consolidate the fragmented European charging market through widely deployed
charging stations and e-mobility services.
That exciting news comes on the heels of ChargePoint’s acquisition of ViriCiti, a provider of electrification solutions for
e-bus and commercial fleets.
ViriCiti has a customer base in Europe and North America, so this could also serve to diversify ChargePoint’s geographic outlook.
So far, ChargePoint is commercially active in 16 European countries. Yet, the skeptics might ask whether any of this regional expansion translates to revenue growth for the company.
Thankfully, the answer is definitely yes – and there’s data to prove it.
ChargePoint’s second-quarter 2021 results show record revenues, totaling $56.1 million. That’s an increase of 61% on a year-over-year basis.
Not impressed yet? Then check this out: ChargePoint counted $40.9 million in quarterly networked charging revenues, for an increase of 91% year-over-year.
Plus, ChargePoint’s balance sheet remains rock-solid with $618.5 million in cash as of July 31.
With those numbers undoubtedly in mind, ChargePoint raised its full-year revenue outlook from $195 to $205 million, to $225 to $235 million, for the year ending Jan. 31, 2022.
The Bottom Line
While the naysayers might have plenty of passion, the data clearly favors the bull thesis for CHPT stock.
Granted, the stock’s price action hasn’t been encouraging. Still, volatility is to be expected when you’re investing in emerging technologies.
Sooner or later, CHPT stock should swing back to the upside.
The market might not appreciate ChargePoint’s true value just yet – but when it does, the early stakeholders should be richly rewarded.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.