Many analysts point to the lack of charging ports as perhaps the most important impediment to the growth of electric vehicle (EV) adoption, notes Carl Delfeld, an international investing specialist and editor of Cabot Explorer.
An indirect but powerful way to play the EV revolution is through companies providing battery-charging ports and stations. Many analysts point to the lack of charging ports as perhaps the most important impediment to the growth of EV adoption.
With more than 112,000 charging points in North America and Europe, ChargePoint Holdings (CHPT) is one of the biggest EV charging companies in the world. The company claims to control 70% of the public charging market share in North America.
This lead is a huge advantage because of network effects as the company already has partnerships with more than roughly 60% of the Fortune 50 companies.
ChargePoint also has teamed up with automakers like BMW so that their charging locations are seamlessly integrated into in-car navigation systems, plus the company has a widely downloaded app which allows EV drivers to easily locate ChargePoint charging stations.
The electric-vehicle charging station market is expected to be worth $103 billion by 2028, translating to a compound annual growth rate (CAGR) of 26.4%.
ChargePoint’s cloud subscription platform and software-based charging hardware include options for home and multifamily to workplace, parking, retail and transport fleets.
One ChargePoint account provides access to hundreds of thousands of places to charge in North America and Europe. So far, more than 92 million charging sessions have been delivered, with drivers plugging into the ChargePoint network every two seconds.
ChargePoint went public through a SPAC and the stock traded as high as $49 last December, but has fallen all the way to $21. The stock got way ahead of itself in terms of valuation as EV mania in the market overtook common sense. The stock does appear to have some support around $20.
In its most recent quarter, ChargePoint generated revenue of $40.5 million compared to the $2.2 million generated by its main competitor, Blink Charging (BLNK).
Revenue grew 24% year over year in the first quarter and the company expects revenue between $195 million and $205 million for its fiscal year ending January 31, 2022. Looking ahead, ChargePoint projects that it will reach 425,060 charging ports and $2.1 billion in revenue by 2026.
I believe the market may be undervaluing ChargePoint’s strong growth outlook. Consequently, I believe that the stock can be accumulated at its current levels.
The stock traded at a 52-week high of $49 and I would not be surprised if the shares regain that level in the next 12-18 months. The company is expected to release financial results for the second quarter after market close on Wednesday, September 1.