What happened
ChargePoint (CHPT -0.39%) just clocked its best week so far this year, having gained 15% through the week as of 1:30 p.m. ET Friday according to data provided by S&P Global Market Intelligence. It's a pretty sharp recovery given that the electric vehicle (EV) charging stock barely budged since the start of February until this week. Credit goes to a confluence of strong numbers and geopolitical factors.
So what
ChargePoint stock started to pick up ever since the company released its fourth-quarter and fiscal-year 2022 earnings on March 3. Here are some notable numbers from the fourth quarter:
- Revenue up 90% year over year to $80.7 million.
- Gross margin of 22%, up 1 percentage point from the year-ago quarter.
- Net loss of $60.5 million versus $90.8 million in the year-ago quarter.
These numbers reflect exactly what investors want to see in an early-stage growth company: a growing top line and shrinking losses.
Image source: Getty Images.
A further break-up of its revenue revealed robust demand for ChargePoint's networked EV charging hardware as well as strong growth in recurring revenue from its subscription software and services. So as of Jan. 31, the company had more than 174,000 ports versus 163,000 ports as of Oct. 31, 2021. That drove ChargePoint's charging-systems revenue up 109% and subscription revenue up 57% in the fourth quarter, both year over year.
Soon after its earnings release, ChargePoint stock received multiple analyst upgrades, and even the handful of downgrades it received because of potential margin pressures still suggest strong upside potential in the stock price. To give you an example, D.A. Davidson analyst Matt Summerville cut ChargePoint's price target to $25 per share from $30 on Monday, but that still meant nearly 74% upside from the stock's closing price on March 4.
Investor sentiment for ChargePoint rose alongside other EV stocks as the week progressed thanks to surging oil prices, which typically add to renewable energy's appeal. In fact, the dizzying rally in oil prices that's exacerbated the energy crisis in Europe has spurred worldwide discussions about why it's imperative now to switch to cleaner fuels to secure energy security.
Transportation is among the largest contributors of greenhouse gas emissions, which is why EVs are considered a key component of the clean-energy equation.
Now what
The company is bullish about 2022 and expects to generate $450 million to $500 million in revenue in fiscal 2023, or almost 96% growth at the midpoint from fiscal 2022. That means ChargePoint is headed for its biggest year yet in terms of revenue, and that growth is what investors looking to play the EV boom bet on this week.
