What happened
Many growth stocks in the electric vehicle (EV) sector started 2022 poorly. Investors shifted from many aggressive names into cyclical and more valued-oriented stocks. Shares in EV charging network company ChargePoint Holdings (CHPT +0.32%) weren't spared from that rotation. ChargePoint stock was down nearly 25% through the first two months of the year. But March was a different story entirely, with ChargePoint shares rocketing 36.9% higher, according to data from S&P Global Market Intelligence.
So what
On March 2, ChargePoint reported its fourth-quarter and full-year fiscal 2022 results for the period ended Jan. 31, and investors liked what they saw. In addition to exceeding previously raised revenue guidance, the company thrilled investors with the growth it expects for fiscal 2023.
Image source: ChargePoint Holdings.
Now what
ChargePoint reported full-year total revenue of $242.3 million, representing 65% growth from the prior-year period. Unlike many other growing EV sector companies, that also significantly surpassed the company's initial guidance provided earlier in 2021, which was estimated for $200 million at the midpoint of the range. Perhaps more significantly for investors, the company said it expects that figure to increase up to 106% for its next fiscal year if it matches the $500 million at the high end of the given range.
NYSE: CHPT
Key Data Points
ChargePoint's accelerating growth is being driven by an increasing number of partnerships with automotive manufacturers including Mercedes-Benz USA and Toyota Motor, as well as private sponsors of renewable power and battery storage projects, including one managed by asset manager Goldman Sachs.
The agreement with Goldman Sachs Renewable Power (GSRP) announced in March aims to grow the deployment of vehicle charging stations by offering businesses and consumers financing options to reduce the up-front costs associated with vehicle charging technologies. Similarly, the recently announced partnership with Toyota will "enable convenient, accessible home and public electric vehicle (EV) charging for drivers of Toyota's new battery electric bZ4X SUV."
ChargePoint isn't profitable yet, as it focuses on building out its network and providing EV users easier access to charging infrastructure. It importantly is also building its ChargePoint-as-a-service product family that will lead to recurring revenue. That income stream should eventually be the driver to profitability, as ChargePoint is able to reduce capital spending for building its network of charging hardware.
That point is still in the distant future. But the amount of time it takes can be seen as a long-term strength in ChargePoint as an investment, however, as it highlights the eventual size of the EV market. ChargePoint is a leader in its portion of the sector, and investors in March saw the evidence of its growing business as a reason to gain exposure.
