What happened
Owners of ChargePoint Holdings (CHPT 1.15%) stock needed a strong stomach to end 2021. After a 24% gain to start the fourth quarter in October, shares of the electric-vehicle (EV) charging network company ended the year with a 25.4% drop in December, according to data from S&P Global Market Intelligence.
So what
All the ups and downs came as a bipartisan infrastructure bill was being debated in Congress. The now-passed bill contains $7.5 billion allocated toward building out the country's EV charging infrastructure, as well as another $5 billion to replace municipal and school buses with zero-emission vehicles. But the boost for ChargePoint shares from that future benefit was replaced with concern investors showed in December for growth stocks like ChargePoint. Many, like ChargePoint, are spending money now to seek profits down the road.
Image source: ChargePoint.
Now what
While the prospect of rising interest rates and growing competition in the EV space had investors rotating out of these names in December, ChargePoint did give investors some positive news during the month.
The company announced a prominent new addition to its board of directors. Former U.S. Secretary of Transportation and Secretary of Labor Elaine Chao was appointed to the board on Dec. 2. Considering her distinguished career and the aforementioned infrastructure investments planned for the EV charging sector, her addition to a leadership position within the company seems potentially beneficial.
The third-quarter earnings report in December also revealed that the company raised its full-year 2021 revenue guidance for the second time in six months. Management now sees 2021 revenue coming in between $235 million and $240 million. As recently as June, the company expected 2021 revenue of up to $205 million on the high end of its range.
But investors seemed to focus more on the bottom line after the third-quarter report. The company reported a net loss of $69.4 million, which was more than expected and grew from a $40.9 million loss in the prior year's comparable period.
ChargePoint continues to invest in growing its hardware investments, hoping to turn them into a profitable income stream as the conversion to electrified transportation accelerates. But investors will have to withstand volatility along the way. Whether the stock recovers in 2022, or beyond, remains to be seen. But the stock drop in December should be a reminder that it is a long-term investment that should remain in an aggressive portion of a portfolio.
