What happened
North America's leading electric vehicle (EV) charging network company entered the public markets on March 1 and its shares have bounced around since then. This week, though, shares of ChargePoint Holdings (CHPT 1.83%) marched up more than 10%.
So what
ChargePoint just reported financial results for the second time as a public company, and it has again maintained revenue estimates the company gave to investors as it prepared to go public through a SPAC merger. That helped the stock hold gains it made earlier in the week, as reports of an agreement on a federal infrastructure bill that includes funding for EV charging infrastructure became more optimistic.
Image source: ChargePoint.
Now what
President Joe Biden's original infrastructure plan intended to accelerate the shift to electric vehicles with a $174 billion investment in the EV market. This included funding a national network of 500,000 charging stations by 2030. As part of the negotiations, Biden met with Republican Sen. Shelley Moore Capito of West Virginia this week to discuss a compromise. Investors in ChargePoint and other EV sector names bid shares up on hopes additional investments in the sector will result from the negotiations.
But ChargePoint doesn't necessarily need a finalized infrastructure bill for its business to thrive. ChargePoint has more than 132,000 charging locations, and over 5,000 commercial and fleet customers. The company says it has more than 70% of the North American Level 2 network market. It also is already operating in 16 European countries. ChargePoint also has more than 2,000 publicly available fast-charging stations.
In its fiscal 2022 first-quarter report released Thursday night, the company said quarterly revenue grew 24% versus the prior-year period. More importantly for investors, management maintained its full fiscal year guidance that would imply year-over-year revenue growth of 37% at the midpoint of the outlook. It's notable that guidance was unchanged, as other newly public companies in the EV sector have backed off of predictions made to investors prior to releasing financial updates as public companies when they are held to higher standards.
ChargePoint is also well capitalized from the process of going public, with $610 million in cash on the balance sheet. Its enterprise value (EV), though, is a lofty $7.6 billion. That makes the EV-to-sales ratio 38 based on the current fiscal year revenue estimate. The company believes revenue will grow quickly in the next several years, however.
This week brought good news for ChargePoint investors, but they should own the stock with a long-term time horizon and knowledge that with its current valuation, any hiccups in the growth story could bring the stock down quickly.
