ChargePoint Stock Price Forecast December 2021 – Time to Buy CHPT Stock?

EV (electric vehicle) charging stocks saw upwards momentum last month after the bipartisan infrastructure bill, which stipulates billions of dollars in investment towards the sector was passed. However, EV charging stocks including ChargePoint (CHPT) have since come off the highs.

Along with a general sell-off in EV charging names, the broader-market pessimism amid the uncertainty over the omicron variant also took a toll on ChargePoint stock. Some of the Wall Street analysts are sounded a note of caution over EV charging stocks after they rallied in November. What’s the forecast for CHPT stock and is it a good buy in December 2021?

ChargePoint stock latest news

ChargePoint released its earnings for the fiscal third quarter of 2022 yesterday. It reported revenues of $65 million in the quarter ended October, which was 79% higher than the corresponding period last year. It reported networked charging revenue of $47.5 million in the quarter which was 111% higher as compared to the third quarter of the previous fiscal year. The company’s subscription revenues increased 24% to $13.4 million over the period.

ChargePoint reported a GAAP gross margin of 25% in the quarter which was 5 percentage points higher than the corresponding quarter last year. CHPT attributed higher margins to acquisitions and improvement in product costs.

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CHPT reported a massive loss in the quarter

Meanwhile, ChargePoint’s net loss also swelled to $69.4 million on a GAAP basis. The GAAP net loss was higher than the company’s total revenues. The adjusted net loss which excluded items like stock-based expenses also rose to $47.3 million from $32.5 million. Here it is worth noting that while companies tend to exclude stock-based compensation in adjusted earnings, they are pretty much an expense. Even Warren Buffett is critical of companies trying to separate stock-based compensation to arrive at adjusted earnings. But then, showing adjusted earnings after deducting stock-based compensation is quite a common and legit practice.

ChargePoint raised its full-year guidance

Meanwhile, markets don’t really expect a growth company like ChargePoint to post profits. Looking at the positive side, the company’s topline growth in the quarter was better than expected and it also raised the full-year guidance. It expects to post revenues between $73-$78 million in the fiscal fourth quarter which would mean full-year revenues between $235-$240 million. Previously, the company had said that it expects to post revenues between $225-$235 million in the year.

Commenting on the earnings, Pasquale Romano, President and CEO of ChargePoint said “ChargePoint has delivered another strong quarter, as we have continued to scale our commercial, fleet and residential verticals across two continents.”

CHPT went public through a SPAC merger

CHPT went public earlier this year through a SPAC (special purpose acquisition company) merger. SPAC reverse mergers have been the preferred listing mode for EV charging companies and Volta and EVgo also opted for the same route. Several EV companies like Fisker, Lucid Motors, and Canoo, along with battery maker QuantumScape also went public through the SPAC reverse merger.

Meanwhile, while CHPT stock trades at less than half the 52-week highs, it is trading at a premium of over 100% over the SPAC IPO price. That’s no mean achievement in itself considering the fact that several companies that went public through a SPAC reverse merger, including those in the EV ecosystem, trade well below the IPO price.

ChargePoint stock forecast

ChargePoint is among the largest EV charging companies globally having operations in North America and Europe. The company has delivered over 98 million charges and over three-fourths of Fortune 50 companies are its customers. The company targets business, fleet companies, as well as individual drivers.

EV charging companies including ChargePoint are expected to witness strong growth over the next decade as the world transitions towards electric cars. Billions of dollars would need to be invested in EV charging infrastructure globally for EV adoption to grow.

CHPT stock target price

CHPT has a median target price of $30 which is a premium of almost 38% over current prices. The street low target price is $24 which is a premium of 10.3% while the street high target price of $46 is a premium of 111%.

Analysts have a consensus buy rating on ChargePoint stock and 11 of the 18 analysts rate it as a buy while the remaining seven rate it as a hold or some equivalent.

Last month, Piper Sandler and JPMorgan initiated a coverage on CHPT stock with a neutral rating and target price of $24 and $26 respectively. Capital One also initiated a rating with a hold rating and a $24 target price. However, Evercore ISI initiated a coverage with a $34 target price and an outperform rating.

ChargePoint stock long-term forecast

During the merger, ChargePoint provided its long-term forecast. It expects its revenues to rise at a brisk pace and hit $1.42 billion in 2025 and $2.06 billion in 2026. Notably, CHPT is among those companies which have raised their 2021 guidance. Many of the companies that went through a SPAC reverse merger, including the likes of Paysafe and Clover Health had to tone down their guidance.

CHPT also expects its margins to rise gradually and is forecasting gross margins in excess of 40% after 2024. In its fiscal year 2027, it expects to post adjusted EBITDA margins of 16%.

Should you buy CHPT stock?

CHPT stock looks like a good buy after the recent correction. While it may appear overvalued based on near-term valuations, the long-term multiples look attractive. The company has a market cap of $7 billion which is just about 3.5x of its projected 2027 revenues.

Given the explosive growth that the EV charging industry is expected to witness, CHPT is a good play on the industry. The stock is not looking too bullish on the charts though and trades below the 50-day, 100-day, and 200-day SMA. That said, the EV ecosystem is among the most attractive investing themes for the next decade and CHPT looks a good ancillary play on the industry.

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