What happened
Electric vehicle (EV) charging network company ChargePoint (CHPT +3.77%) reported its third-quarter fiscal 2023 results last night, and investors are focusing on some of the more negative points. As a result, ChargePoint shares initially dropped more than 7% early Friday morning. As of 10:50 a.m. ET, the stock remained lower by 6.3%.
NYSE: CHPT
Key Data Points
So what
The company missed analyst expectations on both the top and bottom lines. It also narrowed its guidance for the fiscal fourth quarter, which was seen as a more positive side of the report. Revenue soared 93% year over year, but analysts expected even more. The $125 million reported was below the FactSet consensus for $132 million in sales, and the reported $0.25 loss was $0.05 more than predicted.
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Now what
ChargePoint's fiscal fourth quarter guidance would also be above expectations. The company narrowed its range for full-year guidance, with the midpoint representing a 98% jump above the prior year. ChargePoint CEO Pasquale Romano said the company continues to scale the business to meet strong demand. He commented in a statement, "Our networked, asset-light business model continues to enable our growth as we strive to deliver improved margins and operating leverage."
While the sharply growing sales confirm that demand remains strong in its North American and European markets, investors have already priced much of that growth into the stock's valuation. The stock is trading at above 8 times revenue for the full fiscal year if the company hits the midpoint of its guidance.
That price-to-sales (P/S) level is already lofty, but the rate of growth is high enough that some investors will likely be willing to hold shares to let that growth play out. There are others, however, who don't want to tie up funds over that length of time, especially in an uncertain economic environment.
