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Why ChargePoint Holdings Stock Climbed 24% in October

By Howard Smith – Nov 6, 2021 at 10:58PM

Key Points

  • Investors sold out of ChargePoint until the prospects of a huge influx of federal spending sparked renewed interest.
  • ChargePoint raised its revenue guidance for the fiscal year in its last financial update.

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Much of the recent interest in the electric vehicle sector was due to anticipation for a new infrastructure bill -- and that's now a reality.

What happened

Electric vehicle (EV) charging network stocks have garnered much interest as EVs look to take a significantly larger share of the transportation sector. But there are still questions about whether these companies can become sustainably profitable. That concern has led to a decline in ChargePoint Holdings (CHPT 9.20%), which has dropped more than 38% year to date. But that wasn't the case in October, when ChargePoint shares soared 24%, according to data from S&P Global Market Intelligence. And there's a reason that spike may continue into November. 

row of electric cars plugged into charging stations.

Image source: Getty Images.

So what

Investors have been anticipating passage of the bipartisan infrastructure bill that has been at the center of political debate recently. The bill contains $7.5 billion allocated toward building out an electric vehicle charging infrastructure, as well as another $5 billion dedicated to replacing buses, including school buses, with zero-emission vehicles. Investors bid up stocks, including sector leader ChargePoint, hoping the bill would pass, and that has now become reality. 

Now what

ChargePoint is a leading network provider in the U.S. and is growing its business in Europe. As of July 31, the company had more than 118,000 charging ports, including more than 3,700 DC fast chargers. More than 5,400 of those ports were in Europe, where it is seeking to grow with the acquisition of a leading European mobility charging platform that it closed on in October.

And unlike several EV sector companies that went public through recent mergers with special purpose acquisition companies, ChargePoint not only achieved its revenue projections once becoming public, but it also increased its guidance for calendar year 2021 sales. In its last quarterly financial update, the company reported revenue growth of 61% from the prior year period, and it boosted its estimate for full fiscal year sales by 15% to $230 million at the midpoint of the new guidance range. 

Since August, ChargePoint has added two companies to its roster help its position in advancing vehicle electrification in Europe. But the prospects for passage of the infrastructure bill in the U.S. is probably what drove investors back into the stock in October. Now that the bill has passed in the House of Representatives and is heading for President Biden's signature, it's possible there will be continued momentum in the stock. Ultimately, though, how that spending potentially boosts revenue and moves the company closer to profitability will determine the longer-term direction of the company and the stock. 

Howard Smith owns shares of ChargePoint Holdings Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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