ChargePoint Holdings, Inc.

CHPT Details

ChargePoint Holdings, Inc. (NYSE: CHPT) creates, manufactures, and sells networked electric vehicle (EV) charging system infrastructure, as well as subscription-based cloud-based services that enable consumers to locate, reserve, authenticate, and pay for EV charging sessions. The network also offers a variety of web-based interfaces for business, fleet, and residential users. CHPT makes money by providing pre-paid Networked Charging Systems, Cloud Services, and extended parts and labor warranties.

Latest News:

• Board Appointment: On December 2, 2021, Elaine L. Chao was appointed to the board of directors of CHPT. Secretary Chao is a national and global leader in the public, private, and nonprofit sectors and has been approved to two Cabinet positions by the US Senate on a strong bipartisan basis. She is currently on the boards of Kroger Co., Hyliion Holdings Corp. and Embark Technology, Inc.

Q3FY22 Results

• Solid Revenue Growth: The company reported a surge of 78.84% in revenue to USD 65.03 million during Q3FY22 (ended October 31, 2021) from USD 36.37 million during Q3FY21, attributable to significant growth across the commercial, fleet, and residential verticals in North America and Europe.
• Net Losses extended: However, its net loss for Q3FY22 increased to USD 69.44 million from USD 40.89 million reported in Q3FY21.
• Strong Balance Sheet: CHPT exited the quarter with a cash balance of USD 365.49 million and no outstanding debt.

Key Risks

• Supplier Concentration: CHPT is dependent on a limited number of suppliers for the manufacturing of its charging stations. Also, some of its products and components are sourced from a single vendor. Therefore, any failure on the contractual obligation by vendors could harm its operations.
• Dependency over faster EV adoption: CHPT's prospects are entirely dependent on the adoption of electric vehicles by businesses and consumers. As a result, any drop in EV demand or slow growth in the EV industry could harm the company's financial and operational success.

Outlook

• Revenue Guidance: As of Q3FY22, CHPT expects to clock revenues of USD 73 – 78 million in Q4FY22 (ending January 31, 2021). In addition, it has also raised its revenue forecast for FY22 to USD 235 – 240 million.

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

(Analysis by Kalkine Group)

• % 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.

CHPT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

CHPT's stock price has declined 53.39% in the past nine months and has made a new 52-week low as on January 24, 2022. However, the leading momentum indicator 14-day RSI Index hovering in a oversold zone at 21.45, implies a potential pull-back from the current trading level. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 15.54.

Considering the significant correction in the stock price, strong balance sheet, positive outlook, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 12.35, down 6.58% as of January 24, 2022, 02:29 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.