ChargePoint Stock Is Soaring Because Things Are Getting Good

2 weeks ago 10
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*ChargePoint EV chargers.

Business Wire

Stock in ChargePoint is rising after the electric- vehicle charging company’s second-quarter sales topped analysts’ expectations.

ChargePoint (ticker: CHPT) stock was up about 12% in after hours trading. Shares rose 0.4% Wednesday, while the S&P 500 was flat and the Dow Jones Industrial Average dropped 0.1%.

The company reported a 29-cent-per share loss from $56.1 million in sales. Wall Street was looking for a 13-cent loss from $49 million in sales.

Earnings don’t matter as much as sales at this point in the company’s history. ChargePoint is new and growing. Expenses were also affected by rising stock-based compensation of about $28 million. The figure totaled less than $8 million in the first quarter of the year.

Not only did second-quarter sales beat expectations, management forecast $60 million to $65 million for the third quarter. Analysts’ financial models assume $55 million. For the full year, ChargePoint expects about $230 million in sales, up from prior guidance of about $200 million. Wall Street is modeling $208 million in 2021 sales.

Overall, it looks like a good quarter.

“ChargePoint’s strongdecl second quarter results demonstrate our continued growth and leadership in the electric revolution,” said CEO Pasquale Romano in the company’s news release. “We achieved record revenue, significantly grew our commercial, fleet and residential businesses, launched a charging integration with Mercedes, announced our agreement to acquire e-mobility technology provider has·to·be and acquired eBus and commercial vehicle management provider ViriCiti.”

The news comes as a relief to investors. The stock is down about 18% over the past three months, declining with other EV-related small-cap stocks. Shares of Arrival (ARVL) and Lucid (LCID), for instance, have dropped about 38% and 18% over the same span.

Downbeat forecasts from General Motors (GM) on its second-half earnings have been a headwind. The semiconductor shortage hampering global auto production remains a problem.

But fundamental developments for EV charging stocks have been a little better. President Joe Biden’s recently passed $1 trillion infrastructure bill is a benefit even even if the amounts to be spent on charging infrastructure fluctuated in different versions of the bill. That money will get allocated years down the road.

It is still early days for EV stocks and EV charging-, so it is tough to assess the impact of new spending on the sector. There are only a few million EVs on American roads—a fraction of the 200-plus million light vehicles driving around. Current results are less important for ChargePoint than the outlook for growth.

Wall Street is optimistic about the long term. Eight out of 10 analysts covering the stock rate shares Buy. The average Buy-rating ratio for small capitalization stocks is about 60%. The average analyst target price is about $35 a share, implying gains of about 65% from recent levels.

Management scheduled an earnings conference for 4:30 p.m. Eastern time to discuss the results.

Write to Al Root at allen.root@dowjones.com

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