Please ensure Javascript is enabled for purposes of website accessibility

Better Electric Vehicle Charging Stock: Volta or ChargePoint

By Rekha Khandelwal – Aug 31, 2021 at 10:31AM

Key Points

  • The two companies differ significantly in terms of scale of operations.
  • Volta management forecasts high revenue growth in the coming years.
  • Both EV charging companies are still years away from generating profits.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Volta is going public through a SPAC merger. Here's how it stacks up against established segment leader ChargePoint.

Electric vehicle charging company Volta (VLTA 1.86%) went public on Friday after merging with special purpose acquisition corporation Tortoise Acquisition Corp. II. The merger adds one more name to the universe of publicly traded electric vehicle charging stocks, the other ones being ChargePoint (CHPT 0.17%), Blink Charging, and EVgo. ChargePoint has the largest EV charging network in the world. Let's see how Volta compares with it.

ChargePoint's network is bigger

Let's begin by comparing some of the basic operational and financial numbers and projections for the two companies.

Metric Volta ChargePoint
Number of charging stations 1,900+ 112,000+
2020 Revenue $20 million $135 million
Expected Revenue 2021 $36 million $198 million
Expected EBITDA break-even year 2023 2024

Data source: ChargePoint, Volta 

Volta is much smaller, but its revenue growth projections are quite aggressive due to its extensive development pipeline. For example, management forecasts 2022 revenue of $108 million, which would amount to 169% growth from its projected 2021 revenue of $36 million. Further, it anticipates that its top line will rise by another 122% in 2023 from 2022. Overall, between 2021 to 2025, Volta expects revenue to grow at a compound annual rate of 108%. By comparison, ChargePoint's projected growth rate comes to an average of 59% for the same period. 

In the long-term, Volta expects to generate gross margins of roughly 40%, a figure that's in line with ChargePoint's expectations. Notably, the gross margin numbers for both the companies are projections by respective management teams. ChargePoint went public in February and, like Volta, does not have any track record to help determine whether the management may achieve its projections or not. Its always worth treating such projections with a grain of salt, especially when these look so optimistic.  

Young woman is standing near the electric car and holding smartphone.

Image source: Getty Images.

Different business models

The two companies also differ in terms of their revenue generation strategies. ChargePoint generates revenue mainly from commercial customers such as offices, commercial buildings, hotels, and universities, which typically provide EV charging facilities as a perk to their employees, tenants, or visitors. ChargePoint also focuses on the electrification of large fleets such as those operated by logistics companies or shared mobility providers. And it sells chargers to commercial and residential customers, along with servicing the installed equipment.  

By contrast, Volta's chargers double as digital advertising platforms, and the company generates revenue mainly by selling the advertising space. It strategically installs its chargers at places where consumers are already planning to spend some time, like shopping malls, which reduces the inconvenience of charging a vehicle.

And the better buy is...

ChargePoint is trading at an enterprise value of $6.5 billion, and it generated $135 million in sales in 2020. So, its EV-to-sales ratio is around 48. Based on this year's sales forecast of $198 million, that ratio drops to around 33. By comparison, Volta's EV of $1.4 billion and its 2020 sales of $20 million give it an EV-to-sales ratio of 70. Based on its expected sales for 2021 of $36 million, the ratio comes to around 39. So on that valuation metric, ChargePoint looks better.

However, if we consider Volta's sales target of $108 million for 2022, its EV-to-forward-sales ratio improves to around 13. By comparison, ChargePoint's projected revenue of $346 million for 2022 gives it an EV-to-forward-sales ratio of around 19.

But I think Volta's 2022 projection is something of a stretch, and that there's a fair chance the company won't hit it. Based on actual sales already generated, ChargePoint's ratio is stronger, which makes it a better buy today. However, it's also worth noting that an EV-to-sales ratio of 48 is still high for a company that is years away from profitability.

Electric vehicle charging companies face a risk of potentially thin margins, as there is not much differentiation that they can offer through their products. This will impact both ChargePoint and Volta. How successful they eventually turn out to be will depend on their service quality as well as the advertising and commercial partnerships that they secure. The wisest course for investors might be to stand back and watch both of these companies for a while longer to see how they evolve before deciding whether to open a position in either of them.

Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Volta Inc. Stock Quote
Volta Inc.
$0.58 (1.86%) $0.01
Blink Charging Co Stock Quote
Blink Charging Co
$13.23 (1.15%) $0.15
Tortoise Acquisition Corp. II Stock Quote
Tortoise Acquisition Corp. II
ChargePoint Holdings Inc. Stock Quote
ChargePoint Holdings Inc.
$11.99 (0.17%) $0.02
EVgo, Inc. Stock Quote
EVgo, Inc.
$6.22 (-1.58%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.