ChargePoint Holdings Inc.

ChargePoint Holdings Inc. (NYSE: CHPT) is a company that provides electric vehicle (EV) charging technology and is building a fueling network. In North America and Europe, the company offers networked charging solutions for all market sectors, including commercial, fleet, and residential. To support electrification, it provides networked charging hardware, cloud-based computer services, and enhanced parts and labor warranty options to clients. 

Latest News

• Announcement of completion of fast charging corridor: ChargePoint on 13^th April 2022, announced the completion of the first of six electric car fast-changing lanes, worth a total of USD 10 million, in collaboration with the Colorado Energy Office. This campaign has resulted in the activation of 20 fast-charging locations, with many more in the works. Other locations are strategically positioned along major highways such as I-70, Highway 50, Highway 550, and others.
• Closure of USD 300 million financings: ChargePoint's on 13^th April 2022, announced a USD 300 million investment by Antara Capital LP funds managed or advised by CHPT has been completed with the purchase of convertible senior notes to support ChargePoint's expansion plans. The Notes will be convertible at an initial conversion price of USD 24.03 per share, which is a 30.0% premium over ChargePoint's volume-weighted average price for the three trading days following the transaction's announcement.
• Partnership announcement with Goldman Sachs Renewable Power: ChargePoint announced a collaboration with Goldman Sachs Renewable Power (GSRP), a strategic, long-term investor in sustainable energy projects, on March 29, 2022. ChargePoint and GSRP are providing new customized financing alternatives as part of the ChargePoint as a Service product line to help eligible customers lower the upfront expenses of EV charging equipment.

Financial Highlights: Q4FY22

• Strong top-line financial results: Revenue for the fourth quarter was USD 80.7 million, up 90 percent from USD 42.4 million in the same quarter the previous year. Revenue for the whole year was USD 242.3 million, up 65 percent from USD 146.5 million the previous year. Due to product mix and activation latency, subscription growth trailed behind growth in networked charging income.
• Marginally improved profitability margins: Due to the impact of acquisitions, non-GAAP gross margin was 24 percent in the fourth quarter, compared to 22 percent in the same quarter last year. Non-GAAP gross margin for the full year was 24 percent, up from 23 percent the previous year. Non-GAAP gross margin excludes stock-based compensation expense and depreciation from acquired intangible assets.

Key Risks

• Long term negative returns: ChargePoint has enjoyed tremendous growth and aims to continue investing in expansion for the foreseeable future. Its business, operating results, and the financial situation might all suffer if it fails to manage expansion successfully. ChargePoint is a young firm with a track record of losses, and it expects to incur considerable costs and losses soon.
• Risk due to Marco economic factors: ChargePoint is at risk from health pandemics, such as the current coronavirus outbreak, which might have a substantial negative impact on its business and results of operations.
• Key Partner loss: ChargePoint relies on a small number of suppliers and manufacturers for its charging stations, which has resulted in a key partner loss. The loss of any of these partners might have a detrimental impact on the company's operations.

Outlook

ChargePoint anticipates revenue of USD 72 million to USD 77 million for the first fiscal quarter ending April 30, 2022, an increase of 84 percent over the same period the previous year. For FY2022, revenue is predicted to be in the range of USD 450 million to USD 500 million, representing a 96 percent increase over the previous year. With non-GAAP operating costs of USD 350 million to USD 70 million, non-GAAP gross margins of 22 percent to 26 percent are projected. In comparison to the previous year, this is a 50 percent gain, which can be expected from a high growth rate company.

Valuation Methodology: Price/Sales Per Share Multiple Based Relative Valuation

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Source: REFINITIV, Analysis by Kalkine Group

Stock recommendation

CHPT's stock price has fallen 44.62% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 11.21 to USD 36.86. We have valued the stock using the Price/Sales -based relative valuation methodology and arrived at a target price of USD 16.12.

Considering the significant correction in the stock price, solid margins, strong FY22 revenue results, current valuation, encouraging outlook, and associated risks. We recommend a "Speculative Buy" rating on the stock at the current price of USD 13.43, up 2.19 % as of May 03, 2022, at 10:45 am PDT.

Technical Analysis Summary

1-year technical chart (as of May 03, 2022, at 10:45 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

*Current price as of May 03, 2022, at 10:45 AM PDT

Technical Indicators Defined: - 

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices. 

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.