Should you buy ChargePoint stock?
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ChargePoint stock analysis. CHPT stock.
As the world transitions to electric vehicles, electric charging company ChargePoint is showing rapid growth. Revenue increased 97% in 2022 and is now almost 10 times higher than in 2018.
The business is currently valued at 3 billion dollars. With 283 million of cash and 295 million of debt the enterprise value is roughly the same.
But the company is not yet profitable. ChargePoint has made a loss of 337 million over the last 12 months and has reported negative free cash flow to the tune of 322 million. Furthermore, Stock based compensation at 102 million is roughly 20% of revenue.
ChargePoint makes money in 3 main ways. Hardware sales make up 73% of revenue, cloud services contributes 19% and maintenance services adds up to 8%.
The company is expanding in Europe and gross margins, which dipped to 18% last year have recovered to over 20%. With more than 240,000 ports, ChargePoint is the leading electric vehicle charging network.
But ChargePoint is operating in a competitive and difficult industry. Its main competitors include Blink charging, EVGo, Electrify America and Tesla.
Although Tesla has fewer charging stations, it’s DC chargers are considerably faster and more reliable than ChargePoint’s AC chargers. And partly in response to government funding, Tesla recently made its supercharger network available to vehicles from Ford, General Motors, Volvo and Rivian and more partnerships are highly likely.
That said, ChargePoint’s AC chargers are cheaper and they’re perfectly suitable for charging vehicles at parking lots and other longer term stays.
A bigger problem for ChargePoint is it’s hardware-based business model which is notoriously low margin and subject to commoditization. Even high growth markets can see a race to the bottom in hardware that can lead to razor thin profit margins.
#chptstock #stocks #investing #evstocks
ChargePoint stock analysis. CHPT stock.
As the world transitions to electric vehicles, electric charging company ChargePoint is showing rapid growth. Revenue increased 97% in 2022 and is now almost 10 times higher than in 2018.
The business is currently valued at 3 billion dollars. With 283 million of cash and 295 million of debt the enterprise value is roughly the same.
But the company is not yet profitable. ChargePoint has made a loss of 337 million over the last 12 months and has reported negative free cash flow to the tune of 322 million. Furthermore, Stock based compensation at 102 million is roughly 20% of revenue.
ChargePoint makes money in 3 main ways. Hardware sales make up 73% of revenue, cloud services contributes 19% and maintenance services adds up to 8%.
The company is expanding in Europe and gross margins, which dipped to 18% last year have recovered to over 20%. With more than 240,000 ports, ChargePoint is the leading electric vehicle charging network.
But ChargePoint is operating in a competitive and difficult industry. Its main competitors include Blink charging, EVGo, Electrify America and Tesla.
Although Tesla has fewer charging stations, it’s DC chargers are considerably faster and more reliable than ChargePoint’s AC chargers. And partly in response to government funding, Tesla recently made its supercharger network available to vehicles from Ford, General Motors, Volvo and Rivian and more partnerships are highly likely.
That said, ChargePoint’s AC chargers are cheaper and they’re perfectly suitable for charging vehicles at parking lots and other longer term stays.
A bigger problem for ChargePoint is it’s hardware-based business model which is notoriously low margin and subject to commoditization. Even high growth markets can see a race to the bottom in hardware that can lead to razor thin profit margins.
#chptstock #stocks #investing #evstocks
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NewsTranscript
00:00 As the world transitions to electric vehicles, electric charging company Chargepoint is showing
00:05 rapid growth. Revenue increased 97% in 2022 and is now almost 10 times higher than in
00:11 2018. The business is currently valued at $3 billion, with $283 million of cash and
00:18 $295 million of debt the enterprise value is roughly the same.
00:22 But the company is not yet profitable. Chargepoint has made a loss of $337 million over the last
00:28 12 months and has reported negative free cash flow to the tune of $322 million. Furthermore,
00:34 stock based compensation at $102 million is roughly 20% of revenue.
00:39 Chargepoint makes money in three main ways. Hardware sales makes up 73% of revenue, cloud
00:45 services contributes 19% and maintenance services adds up to 8%. The company is expanding in
00:51 Europe and gross margins which dipped to 18% last year have recovered to over 20%. With
00:57 more than 240,000 ports, Chargepoint is now the leading electric vehicle charging network.
01:02 But Chargepoint is operating in a competitive and difficult industry. Its main competitors
01:07 include Blink, EVgo, Electrify America and Tesla. Although Tesla has fewer charging stations,
01:14 its DC chargers are considerably faster and more reliable than Chargepoint's AC chargers.
01:19 And partly in response to government funding, Tesla recently made its supercharger network
01:24 available to vehicles from Ford, General Motors, Volvo, Rivian. More partnerships are highly
01:30 likely. That said, Chargepoint's AC chargers are
01:33 cheaper and they're perfectly suitable for charging vehicles at parking lots and other
01:37 longer term stays. A bigger problem for Chargepoint is its hardware based business model which
01:42 is notoriously low margin and subject to commoditization. Even high growth markets can see a race to
01:48 the bottom in hardware that can lead to razor thin profit margins. This can be partly seen
01:53 in Chargepoint's negative operating margin of 64%. For every $1 in revenue, they're
01:59 losing 64 cents. Considering the recent cash burn and the amount of cash on the balance
02:03 sheet, Chargepoint will need to raise more funds to stay in operation.
02:07 And Chargepoint doesn't seem to be providing a high level of service. One study found that
02:12 36.4% of its charging stations were non-functioning, much higher than competitors. Compare that
02:19 to Tesla which claims its superchargers have an uptime of more than 99%.
02:24 Slow and unreliable charging is a major frustration for EV owners and that could damage the Chargepoint
02:30 brand. Meanwhile, the company needs to stay on top of rapid technological change as batteries
02:35 and charging solutions are bound to keep developing over the next few years. For all these reasons,
02:41 I think it's best to avoid this stock and I give it a negative rating but these are
02:45 my personal opinions, not financial advice and I've got no position in Chargepoint.
02:49 For more detailed investing ideas, make sure to visit our website overlookedalpha.com