Where Will ChargePoint Stock Be In 1 Year?

The looming threat of climate disaster has generated urgent calls to explore and advance alternative forms of energy.

In fact, this has only gained more impetus as a global alliance of governments, scientists, and NGOs endeavor to alleviate the harm inflicted by the progression of climate impact.

As national administrations and the corporate sector strive to switch from conventional fossil fuels to sustainable substitutes, a generational opportunity has arisen to spur invention in industries that prioritize eco-friendly resolutions.

From wind turbines and solar panels to research and development into new technologies, this shift will create countless new employment vacancies while reducing our impact on the planet.

However, despite the increased focus on renewable sources of energy, those businesses contributing most to the development of the green economy haven’t exactly seen their shares soar in recent times.

For instance, ChargePoint Holdings has recently experienced significant downward pressure on its stock price. Its valuation has fallen 33% over the last twelve months, with short interest in the venture currently running at a worryingly high 21%.

But what does the future hold for CHPT? And where will it be in one year’s time?

Why Makes ChargePoint Different vs EV Makers?

One of ChargePoint’s most popular products is the CP6000 charger series, designed specifically for commercial use. This solution offers networking capabilities, energy management features, and a reliable operation with low maintenance costs making it ideal for fleet operators or businesses interested in providing easy-to-use EV charging equipment.

Moreover, CHPT’s business model stands out from other electric vehicle infrastructure companies because of its innovative and comprehensive approach to solving the issues surrounding charging stations and their requirements.

For example, the company offers cloud-based solutions that enable real-time visibility into charging activity, allowing users to monitor their EVs’ progress remotely.

The platform supports dynamic charging capabilities, which adjust power levels based on individual driver preferences and local grid requirements. Advanced diagnostics also provide insights into maintenance needs or system faults, ensuring maximum uptime and reliability for drivers.

Additionally, seamless integration with distributed energy management systems allows ChargePoint stations to support renewable sources of electricity without sacrificing performance. It operates on Open Charge Point Protocol (OCPP), an industry standard that enables interoperability across several platforms and networks.

All this is further complemented by an intuitive EV charging app which gives users complete control over their charging experience while providing rich insight into usage patterns and behavior analytics.

And with 158 million charges delivered through 225 thousand activated ChargePoint ports worldwide, it’s clear that this advanced technology has been well-received due to its effectiveness in enhancing efficiency in the sustainable transportation sector overall.

Latest Financial Results

Despite falling below its prior guidance, ChargePoint delivered the firm’s biggest sequential sales growth in the fourth quarter of fiscal 2023. Likewise, its total revenue was up 93% year-on-year at $152.8 million, with networked charging systems accounting for $122.3 million.

Moreover, full-year revenues grew 94% to $468.1 million, while subscriptions came in 59% higher to bring in $53.5 million in sales.

Notwithstanding the fact that the company remains a loss-making enterprise just now, there are some signs that the business might be heading in the right direction on the profitability front.

For instance, although CHPT’s non-GAAP gross margin fell year-on-year from 24% to 23%, it’s been on the rise for the last three quarters now.

However, that’s where the last of the good news stops.

Indeed, having witnessed its full-year operating expenses increase 34% to $427.7 million, ChargePoint is burning through its capital reserves right now. Similarly, its net income loss ballooned from $132.2 million to $344.5 million in 2023, leading to a trailing twelve-month EBIT margin of negative 73%.

That said, while the company’s non-GAAP operating expenses rose on an absolute basis, they also fell annually as a percentage of revenue, from 97% in Q4 FY22 to just 53% this year.

Where Does CHPT Go From Here?

As CEO and Director of the business, Pasquale Romano believes that ChargePoint Holdings is at the focal point of an expanding ecosystem that’s “past the point of no return.“

Citing the ongoing investments in the sector, CHPT’s vision to “move all people and goods on electric power” has positioned the firm as one of, if not the, leading players in the space. 

Based on a vertically integrated and software-enabled operation, ChargePoint’s winning business model enjoys strong competitive advantages from its superior technology and easily scalable business.

Nonetheless, just how easy that will be in practice is yet to be determined. The company expects revenue for the first quarter of fiscal 2024 to land somewhere between $122 million to $132 million, implying a year-on-year increase at the midpoint of 56%.

But given that the venture has a forward price-to-sales ratio of 4.43x – and not to mention the cash it’s hemorrhaging through its operating costs- this suggests CHPT could be worth less at the beginning of 2025 than it is today.

On top of that, much of the optimism fueling the EV market in the last few years has been based on the assumption that electric cars would become the default option for consumers. 

However, as the Institute for Energy Research demonstrates, that could be wishful thinking.

Therefore, it would be safer to practice caution when considering an investment in ChargePoint, as past tailwinds are not guaranteed to last forever.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.