What ChargePoint Earnings Say About the State of EV Charging in America

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The electric-vehicle charging-equipment company

ChargePoint Holdings

reported much better sales than even it expected for its latest quarter, but supply-chain issues and inflation are weighing on the shares.

The supply issues are hopefully, short term in nature. Longer term, CEO Pasquale Romano sees a lot more demand for EV charging coming down the pike.

On Tuesday evening, ChargePoint (ticker: CHPT) reported sales of $81.6 million for its first fiscal quarter of 2023. That was higher than the consensus call of $75.7 million among Wall Street analysts and exceeded the range of $72 million to $77 million that management had told investors to expect.

But gross profit came in at $12.1 million, while Wall Street expected $17.3 million. ChargePoint generated $17.5 million in gross profit in its fiscal 2022 fourth quarter, which ended in January.

Parts, such as semiconductors, have been more expensive to purchase and ship. They were also more difficult to get.

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“It’s hard to predict what things [parts] we’re going to receive, so we’re planning on things staying as is,” Romano tells Barron’s. He says the company is improving its supply change management during this period or turmoil “and when it gets better we will benefit.”

Shares are down 3.3% at $12.36 in midday trading Wednesday, while the

S&P 500
and

Dow Jones Industrial Average
are off about 1.3% and 1%, respectively.

Despite the drop, Romano is optimistic about demand. The company projects between $450 million and $500 million in fiscal year 2023 sales. The midpoint, $475 million, implies almost 100% growth compared with fiscal year 2022 sales.

“We didn’t really have any soft spot in our verticals,” says Romano. ChargePoint sells to commercial businesses, vehicle fleets, and residential customers in both North America and Europe.

The company ended its fiscal first quarter with about 188,000 activated charging ports, including 57,000 in Europe. At the end of the previous quarter, it had about 174,000 ports, including 51,000 in Europe.

That number will grow as the number of electric vehicles on roads rises. “For every 100 [electric] cars you’re going to need somewhere between 15 and 20 ports,” says Romano. “We’re talking outside-the-home charging, net of single family residences.”

The U.S. has around five ports for every 100 EVs on the road right now, according to Romano, who notes that the numbers change very rapidly. EV infrastructure is going in, and more EVs are being sold by

Tesla

(TSLA) as well as many other auto makers.

That kind of potential is why Wall Street still likes ChargePoint stock.

Overall, 68% of analysts covering the company rate shares Buy, while the average price target is more than $24 a share—a bit less than double recent levels.

Despite the bullishness, the shares have lost ground in 2022. Coming into Wednesday trading, ChargePoint stock was down about 33% year to date and off about 65% from its June 2021 52-week high of almost $37 a share.

Rising interest rates and inflation have sapped investor enthusiasm for high-growth companies that don’t make money yet. ChargePoint lost $89.3 million in its fiscal first quarter.

Write to Al Root at [email protected]