Shares of electric vehicle (EV) charging network company ChargePoint Holdings (CHPT 2.12%) soared by as much as about 14% Tuesday morning. While the stock backed off those early gains, shares were still higher by 10.9% at 10:50 a.m. ET.
The jump came after competitor Beam Global reported its quarterly earnings, which highlighted how companies in the EV charging sector could carve a path to profitability.
Still an evolving sector
Many EV charging stocks have been getting hammered this year. That has been from a combination of underlying business developments as well as rising interest rates.
NYSE: CHPT
Key Data Points
California-based Beam reported soaring revenue and a strong pipeline of orders. The EV start-up reported a loss of $3.6 million, but that was better than what Wall Street had expected. The company also highlighted consolidation in the industry, and that's where investors may see an advantage to owning ChargePoint.
Not a tide-turning moment
Beam said it closed on the acquisition of a European maker of infrastructure equipment that will help it vertically integrate. That follows another acquisition in the sector during the third quarter. Wallbox expanded its offerings by buying German commercial charging products company ABL.
These companies see advantages to gaining size in the EV charging sector. ChargePoint, though, already has that size. It already has growing operations in both North America and Europe. For perspective, ChargePoint's revenue in its most recent quarter was about 10 times higher than what Beam reported today from its third quarter.
But there are other headwinds for these companies. Any slack in global demand for EVs will make the road to profitability more difficult for charging companies. EV leader Tesla has also recently begun selling its charging hardware directly to third parties.
Today's stock move is also likely tied to more general economic data that was just released. It showed rather benign inflation and that has caused interest rates to drop. That's good for companies that aren't earning profits yet.
The takeaway for investors is that EV charging companies have several obstacles to get to profitability. ChargePoint already has size and scale on its side, though, so many investors see it as the best of the bunch.
