Shares of charging network operator ChargePoint Holdings (NYSE:CHPT) jumped 13.8% over the past week as the company continues to expand its offerings in the EV market. ChargePoint announced earlier this week that it is offering integrated fleet management, services, and charging for large and small fleet buyers. The idea is to be a full-service charging provider to owners of fleets of EVs, which could be a big growth market.
ChargePoint and Mercedes also announced a partnership called "Mercedes me Charge" for the EQ line of EVs. The partnership allows drivers to access ChargePoint's network with seamless mapping and payment features.
The general theme here is that ChargePoint continues to expand the services it's offering to EV drivers. Whether you're a single vehicle owner or a fleet owner, ChargePoint wants to make charging simple, which the company is betting will increase adoption and charger utilization.
For a growth stock like ChargePoint, the biggest strategic wins right now are going to come through partnerships with manufacturers and fleet owners. Charging networks aren't differentiated in what they offer EV owners (electricity), so companies will need to ensure that their network is an integrated partner in the case of fleets and an easy choice in the case of passenger EV owners. Both of these announcements do that.
What's not yet clear is if ChargePoint can translate its user base and revenue growth into profits. In the first quarter of fiscal 2022, the company reported $40.5 million in revenue, a 24% increase from a year ago, but also had a $46.6 million loss from operations. It'll take a lot of revenue growth to turn those losses into profits.
There's been a lot of excitement for EV charging stocks over the past year, partly because of the rapid expansion of electric vehicle production by automakers. But companies like ChargePoint are far from profitable, and it's hard to see that changing anytime soon.
ChargePoint's rise this week may have been driven by some solid products and partnerships, but until the company shows it's on a path to profitability I'll be skeptical of this EV charging stock. I don't see how it's differentiated from the competition, and given the commodity of electricity it's supplying, I don't see how this will ever be a high-margin business long-term.