2021 was a transitional year for the electric vehicle (EV) industry. Sector leader Tesla proved the business can be extremely profitable, as it shipped close to 1 million vehicles leading to net income of $5.5 billion. New start-up EV makers also entered the field at the same time legacy automakers committed tens of billions of dollars to convert their businesses.
Consumers will need to charge all of these vehicles at home, on road trips, in public charging areas, or at fleet staging areas. ChargePoint Holdings (CHPT -0.37%) is the leading charging network in North America, and is growing its presence in Europe. This makes it potentially one of the best investments in the charging sector.
Image source: ChargePoint Holdings.
Growth catalysts
Supply and demand growth in the EV sector seems to be burgeoning on its own. Large existing automakers are electrifying their products with some even phasing out internal combustion engine vehicles completely. Tesla says it can't keep up with customer demand as it gets closer to opening two new Gigafactories in the U.S. and Germany, respectively.
Governments around the world are working to promote the transition to electric transportation to help battle climate change. Just last week in the U.S., President Joe Biden laid out plans to spend the first $5 billion for boosting charging infrastructure from the $7.5 billion committed in the recently passed infrastructure bill.
Even prior to any grants being distributed to aid the growth of domestic charging networks, ChargePoint has more than 163,000 activated charging stations. By comparison, competitors Blink Charging and EVgo had about 28,000 and 1,600, respectively, as of their latest investor presentations. As the North American leader, it makes sense that ChargePoint will gain a catalyst for growth from those investments.
And the company isn't just focused on North America. As of January 2022, it was already operating in 16 European markets. Europe has contributed a growing portion of overall revenue over the first three 2022 fiscal quarters, ended Oct. 31, 2021. ChargePoint recently announced a new partnership in France that will add more than 1,400 charging stations to service a retailer network of branches and distribution centers. These types of partnerships should continue to spur growth in other markets.
Out of favor
For long-term investors, buying when stocks, or overall sectors, are out of favor can supercharge potential returns. That's the case with ChargePoint along with many other businesses in the EV sector right now. ChargePoint shares are down 20% so far in 2022, and down 60% over the past 12 months.
That has brought the market capitalization to about $5 billion. That's still expensive for a company expecting about $240 million in revenue in its last fiscal year ended Jan. 31, 2022. But it has nearly doubled revenue from its networked charging systems through the first nine months of fiscal 2022.
ChargePoint will report its fiscal 2022 fourth-quarter and full-year results on March 2. Investors who want more visibility could wait for that report to see just how much revenue growth management expects in the current fiscal year. The company exceeded its original revenue guidance for its first year as a public company. When it made those estimates in December 2020, it also said it believed revenue could be about $350 million for calendar year 2022. If it meaningfully increases its guidance for this year, ChargePoint will look like a good company to own for investors looking for exposure to that part of the EV sector.
