Many conversations about electric vehicle (EV) stocks revolve around market leaders like Tesla, recent IPOs like Rivian, and smaller players like Lucid and Nikola that went public by merging with special purpose acquisition companies (SPACs). However, many other intriguing EV companies are often overlooked in that shuffle.
Two of those under-the-radar companies are ChargePoint (CHPT -1.43%), an American producer of EV charging stations, and Gogoro (GGR -2.39%), a Taiwanese electric scooter maker that operates battery-swapping stations. Both companies went public by merging with SPACs, but both stocks have tumbled as rising interest rates have crushed speculative growth stocks.
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ChargePoint's stock has declined over 57% from its March 1, 2021 IPO price of $32.30. Gogoro has fared even worse with a decline of more than 70% since its market debut on April 5 of this year. Let's see why these two EV stocks crashed so significantly -- and if either one has a shot at a comeback.
ChargePoint's strengths and weaknesses
ChargePoint generates most of its revenue by selling its EV charging systems to brick-and-mortar businesses, which either provide them as charging stations for customers or use them to charge their own vehicles. It generates the rest of its revenue by charging drivers subscription fees to access those stations.
At the end of the second quarter of fiscal 2023 (which ended on July 31), ChargePoint had an installed base of about 200,000 network ports, 70% more than it had a year ago. For the full year, the company expects its revenue to soar 96%, reaching somewhere between $450 and $500 million, as more businesses install EV charging stations to attract a growing number of EV drivers.
ChargePoint's stock trades at eleven times the midpoint of that forecast, which seems like a surprisingly reasonable price-to-sales ratio for such a high-growth company. Analysts expect that Chargepoint's revenue will rise 99% to $481 million this year, then grow another 55% to $747 million in fiscal 2024. Those projected growth rates easily exceed pre-merger revenue estimates of $346 million and $602 million in annual revenue in fiscal 2023 and 2024, respectively.
However, the company's margins and profits have fallen short of its own expectations. ChargePoint expects to end fiscal 2023 with an adjusted gross margin of 22%-26%, compared to its pre-SPAC forecast of 36%, mainly due to supply chain constraints and higher logistics costs. As a result, analysts expect its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to stay in the red through fiscal 2025 -- compared to the company's original forecast for a positive adjusted EBITDA by the same year, as predicted in its pre-merger presentation.
Analysts expect ChargePoint to rack up a net loss of $315 million this year, which is worrisome for a company that ended its latest quarter with just $472 million in cash, cash equivalents, and marketable securities. Its elevated debt-to-equity ratio of 1.7 could also limit its ability to raise fresh funds as interest rates continues to rise. I also think it's unlikely ChargePoint will turn a profit anytime soon, since it's still aggressively expanding its charging network, and all that red ink could overshadow its impressive growth rates.
Gogoro's strengths and weaknesses
Gogoro generates most of its revenue by selling higher-end electric scooters, installing battery-swapping stations (which allow riders to immediately swap out their depleted batteries for fully charged ones), and charging subscription fees to access those stations. It still generates most of its revenue in Taiwan, but it's been gradually expanding overseas into China, India, Israel, and other scooter-riding markets. It's also opened up its battery-swapping stations to third-party electric scooter makers.
Gogoro ended the second quarter of 2022 with 484,000 monthly battery-swapping subscribers, compared to 450,000 subscribers at the end of 2021, and it just surpassed half a million subscribers in August. However, it only expects its revenue to grow 4%-12% to about $380-$410 million for the full year, compared to its pre-merger estimate of $500 million.
Management mainly attributes that slowdown to macro headwinds and the continued impact of COVID in Taiwan, China, and elsewhere. Overseas expansion, which Gogoro had highlighted as a major long-term catalyst during its SPAC presentation, also remains sluggish, and the company is still heavily dependent on the Taiwanese market. As a result, analysts expect Gogoro's adjusted EBITDA to decline 39% to $23 million this year, compared to its original forecast of $70 million.
Analysts also expect Gogoro's net loss to nearly triple to $195 million, which compares poorly to its cash balance of $379 million at the end of the second quarter. That's deeply troubling, because Gogoro is even more leveraged than ChargePoint, with a high debt-to-equity ratio of 3.4. On the bright side, Gogoro's stock trades at just two times this year's sales -- so a near-term slowdown has already likely been baked into its valuation.
The better buy: ChargePoint
I wouldn't rush to buy either of these stocks in this tough market for unprofitable EV companies. But if I had to choose one over the other, I'd pick ChargePoint over Gogoro for three simple reasons: It's growing faster, it generates most of its revenue in countries that have moved past the COVID-related lockdowns, and it's shouldering a lot less debt. Gogoro's stock is cheaper, but it will remain a less compelling buy than ChargePoint until it stabilizes its near-term growth.
