ChargePoint May Be Down, but Definitely Not Out

ChargePoint May Be Down, but Definitely Not Out

ChargePoint Holdings (NYSE: CHPT) makes charging equipment for electric vehicles and they have recently released their earnings for the latest quarter. Fortunately for them, sales were better than analysts had expected. Unfortunately, supply chain issues and persistent inflation continues to weigh on share price.

Specifically, the middle of this quarter saw ChargePoint shares range from $10.31 to $16.15, over a period of less than two weeks. That is an impressive jump of 56 percent. At the same time, shares hit a top price of $36.86 within the past year; but since then have somewhat plummeted back down to $14.

With such dramatic activity, it might seem like this is a good time to buy—before it reaches its peak—and it appears that most analysts currently agree the stock is Outperforming. Indeed, the consensus seems to insist that CHPT has a Strong Buy rating.

Promising Early Numbers

At first glance, things are looking good for ChargePoint. For one, they saw an increase in quarterly revenue of 102 percent, year over year, from $40.5 million to $81.6 million. Part of this, at least, might be the result of record growth in the European market, posting sequential quarterly revenue growth of 67 percent. In addition, revenue on networked charging systems, for the first quarter, increased by 122 percent, to $59.6 million from $26.8 million from the same quarter last year. Finally, subscription revenue jumped 63 percent, from $10.8 million to $17.6 million.

This has led to strong liquidity and impressive guidance for fiscal 2023 in the range of $450 million to $500 million.

In fact, ChargePoint CEO and President Pasquale Romano has expressed confidence moving forward, even as more and more challenges reveal themselves. In a recent statement, he said, “Positive first quarter results, despite expected significant headwinds due to global supply constraints, are a testament to the strength of our business.”

Troubled By GAAP Losses

While revenue is up, GAAP gross margin for the first quarter slipped from 23 percent last year to 15 percent this year. It appears that lower-margin products are performing very well against their existing—and more mature—higher margin products. Of course, supply chain issues have negatively affected both costs and availability and this takes its toll.

This in mind, Q1 non-GAAP gross margin dropped 17 percent, down from 23 percent in the same quarter a year ago. Non-GAAP gross margin leaves out, at least primarily, both stock-based compensation expense and amortization from intangible assets.

Evaluating these shifts, ChargePoint specifically reported a GAAP net loss for the first quarter of $89.3 million. This includes an amortization expense from acquired intangible assets of $2.9 million as well as roughly $15.5 million-worth of stock-based compensation expense. This aligns with a non-GAAP pre-tax net loss for Q1 of $71.7 million. From the same quarter last year, this metric was reported at $39.4 million.

A Better Outlook Moving Forward

While ChargePoint struggle in some ways at the top of the year, they do expect to see some better numbers for the second quarter, which ends on July 31, 2022. In that report, ChargePoint is on track to post revenue in the range of $96 million to $106 million. Even if they only reach the median it will still represent an anticipated jump of 80 percent year over year.

For the fiscal year guidance, ChargePoint also expects notable growth. For one, they are looking for revenue between $450 and $500 million. The midpoint of this range will represent an anticipated increase of 96 percent year over year.

In addition, ChargePoint expects non-GAAP gross margin to shift from 22 percent to 26 percent on operating expenses between $350 and $370 million. At the midpoint, this metric will signify a 50 percent increase, year over year.

Analysts Give CHPT a Strong Buy Rating

While most analysts agree that ChargePoint shares are poised to bounce back—and thus it is Strong Buy—they do not necessarily agree that now is the time to do it. Indeed, advisers are split 2:1 on Buy and Hold ratings, respectively.

Even though share price is currently hovering around $15, analysts give an average ChargePoint price target of $20.41. This might explain why some analysts suggest investors who have not yet acquired any CHPT shares might want to wait a little longer. There is a chance that value could dip again before recovering and climbing to that price target. After all, share price might be down right now but the company did manage to double their revenue year over year.

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
ChargePoint (CHPT)$16.03+1.9%N/A-16.03Moderate Buy$21.63

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