ChargePoint Holdings, Inc.

CHPT Details

ChargePoint Holdings, Inc. (NYSE: CHPT) designs, develops and markets networked electric vehicle (EV) charging system infrastructure and cloud-based services that allow consumers to locate, reserve, authenticate and transact EV charging sessions. It offers an open platform that integrates with its system hardware and other manufacturers, connecting systems through an intelligent network that provides real-time information about charging sessions. Its network provides multiple web-based portals for charging system owners, fleet managers, drivers, and utilities. In Q1FY22, U.S. accounted for 86.67% of CHPT’s total revenue. As of August 12, 2021, the company’s market capitalization stood at USD 8.06 billion.

Achieving Inorganic Growth via Horizontal Acquisitions: On August 11, 2021, CHPT acquired ViriCiti, an electrification services provider for eBus and commercial fleets, for cash consideration of ~EUR 75 million. This acquisition enables CHPT to accelerate the electrification of fleet and commercial segments. This follows an earlier announcement of the acquisition of has·to·be, an e-mobility provider with a charging software platform on July 20, 2021, for ~EUR 250 million in cash. The transaction is expected to close in 2021. The acquisition is aimed to consolidate CHPT’s leadership in the industry and escalate electrification across Europe.

Secondary Public Offering: On July 14, 2021, CHPT announced the pricing of an underwritten secondary offering of 12 million common shares with a par value of USD 0.0001 per share at an offer price of USD 23.50 per share. In addition, the underwriters were granted a 30-day option to purchase an additional 1.8 million shares. The offering is made up entirely of secondary shares sold by the selling stockholders, who will receive all the proceeds of the offering.

Q1FY22 Results: The company reported a YoY growth of 23.60% in total revenues to USD 40.51 million in Q1FY22 (ended April 30, 2021) compared to USD 32.78 million in Q1FY21. Networked charging systems, which represented 66.16% of the total revenue in Q1FY22, improved by 36.34% YoY, whereas the Subscription segment reported YoY growth of 20.21%. CHPT reported a net income of USD 82.29 million in Q1FY22 vs. a net loss of USD 30.10 million in Q1FY21. As of April 30, 2021, the company had a cash balance of USD 609.81 million, with no outstanding total debt.

Key Risks: 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. In addition, CHPT's prospects rely solely on the adoption of EVs by businesses and consumers. Hence, any downturn in the demand for EVs or sluggish growth in the EV market could impair the financial and operational performance of the company.

Outlook: For Q2FY22 (ended July 31, 2021), CHPT expects it revenue to range between USD 46 – 51 million. For FY22 (ending January 31, 2022), the company estimates its revenue to the tune of USD 195 – 205 million.

CHPT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CHPT's stock price decreased 32.22% in the past six months, and is currently leaning towards the lower band of its 52-week range of USD 10.05 to USD 49.48. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 49.22. Considering the correction in the stock price, strategic acquisitions, improvement in top and bottom line, and other associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 25.18, up 0.48% as of August 12, 2021.

* 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. 

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