Many growth stocks in the electric vehicle (EV) sector have started 2022 poorly. Investors have moved from many aggressive names to cyclical and more value-oriented stocks. Shares in electric vehicle charging network company ChargePoint holdings ( CHPT -0.91% ) were not spared from this rotation. ChargePoint stock is down nearly 25% in the first two months of the year. But in March, it was a whole different story, with shares of ChargePoint soaring 36.9%, according to data from S&P Global Market Intelligence.
On March 2, ChargePoint released its fourth quarter and fiscal 2022 results for the period ending January 31, and investors liked what they saw. In addition to beating previously raised revenue guidance, the company has thrilled investors with the growth it expects for fiscal 2023.
ChargePoint reported total revenue of $242.3 million for the full year, a growth of 65% over the prior year period. Unlike many other companies in the growing electric vehicle space, this also significantly exceeded the company’s initial guidance provided earlier in 2021, which was estimated at $200 million in the middle of the range. Perhaps more importantly for investors, the company said it expects that number to rise to 106% for its next fiscal year if it matches the $500 million at the high end of the spectrum. given range.
ChargePoint’s accelerated growth is driven by a growing number of partnerships with automakers, including Mercedes-Benz USA and Toyota engine, as well as private sponsors of renewable energy and battery storage projects, including one managed by an asset manager Goldman Sachs.
The agreement with Goldman Sachs Renewable Power (GSRP) announced in March aims to increase the deployment of vehicle charging stations by providing businesses and consumers with financing options to reduce the upfront costs associated with vehicle charging technologies. Similarly, the recently announced partnership with Toyota “will enable convenient and accessible home and public electric vehicle charging for drivers of Toyota’s new battery-electric bZ4X SUV.”
ChargePoint is not yet profitable as it focuses on expanding its network and providing EV users with easier access to charging infrastructure. It is also important to grow its family of ChargePoint-as-a-service products that will generate recurring revenue. This revenue stream should eventually drive profitability, as ChargePoint is able to reduce capital expenditures for building its network of charging hardware.
This point is still in the distant future. But the time it takes can be seen as a long-term strength of ChargePoint as an investment, as it highlights the eventual size of the EV market. ChargePoint is a leader in its part of the industry, and investors in March saw evidence of its growing business as reason to gain visibility.
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