As EV Takes Off, Can CHPT Turn the Corner?

In 2019, 1.2 million electric vehicles dotted U.S. highways.

By 2030, that number is expected to climb to somewhere in the range of 18.7 – 30 million.

Major malls, office parks, and retail shops now offer electric vehicle charging stations.

Chargepoint (CHPT) operates one of the largest charging networks in the world, with 118,000 spots across 14 countries with access to over 133,000 public places to charge through network integration in North America and Europe.

Despite the company’s immense reach, it neither generates positive cash flow or a profit.

Our latest TrackStar data suggests a surge in search volume by financial pros looking at Chargepoint’s stock.

So, what exactly do they see that we don’t?

ChargePoint’s Business

ChargePoint emerged on today’s stock exchanges through a special purpose acquisition company (SPAC).

The company’s network of charging stations work with most major brands like Tesla, though they may require an adapter.

However, most of its network is A/C outlets, which don’t charge nearly as quickly as D/C.

Source: ChargePoint Investor Presentation

ChargePoint offers a suite of cloud-based software and hardware solutions for commercial and fleet owners.

Source: ChargePoint Investor Presentation

The company breaks its revenue into two: Networked Charging Systems and Subscriptions. The former encompasses the sale of charging hardware. The latter takes recurring revenue software subscriptions.

Here’s what the unit economics look like for a typical charging station.

Source: ChargePoint Investor Presentation

Financials

Source: Stock Analysis

ChargePoint’s been able to grow revenues at a blistering pace.

And as far as gross margins are concerned, it turns a profit.

However, the R&D and SG&A costs just obliterate any chance at profitability.

Source: ChargePoint Investor Presentation

To be fair, both have come down substantially as a percentage of revenues. And given the pace of improvement, ChargePoint could turn a profit on paper.

However, there appears to be no timeline to become cash flow positive. And at the current rate, ChargePoint will need to raise more capital before the end of next year.

Valuation

Source: Seeking Alpha

Given the popularity of the ‘green energy’ stocks over the last few years, we wanted to see how they fared compared to CHPT.

It turns out that only First Solar (FSLR) was able to report a profit and positive cash flow.

The rest…not so much.

But hey, at least CHPT has the cheapest price-to-sales ratio.

Growth

Source: Seeking Alpha

If you’re not going to turn a profit, then you’d better deliver growth. 

At least CHPT shines there, as does Plug Power (PLUG) and FuelCell Tech (FCEL).

Ballard Power Systems (BLDP) may just be a lost cause.

Profitability

Source: Seeking Alpha

Another point in CHPT’s favor is their positive gross margins, something only FSLR can claim.

But that’s about it.

Our Opinion 2/10

Why did we even give this stock a 2/10?

First, it’s better than most of its peers, which isn’t saying much, but still.

Second, it could find a way to profitability in the next year or so.

But for anyone not trading the stock, it’s best to steer clear.

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