Why ChargePoint Stock Is a Top EV Infrastructure Play for the Next Decade

ChargePoint Holdings Inc Is Supercharging the EV Freeway

For the next few decades, electric vehicle (EV) adoption will be one of the major investment themes. The bullish tailwinds will be driven by continued strong demand in China and Europe while the U.S. aggressively expands its own EV industry.

President Joe Biden’s administration has earmarked tens of billions of dollars for the green energy and EV sectors as the country moves to cut its carbon emissions.

While EV manufacturers dominate the focus of many investors, I suggest also looking at EV infrastructure plays, such as the companies that contribute to the required vast network of EV charging stations.

To play the EV infrastructure field, consider ChargePoint Holdings Inc (NYSE:CHPT), a leading developer of EV charging stations in the U.S. and Europe.

ChargePoint currently has more than 118,000 charging stations in its network, and the company has been rapidly expanding its access points. (Source: “Corporate Overview,” ChargePoint Holdings Inc, last accessed January 4, 2022.)

Despite the initial enthusiasm for CHPT stock in 2021, it has been steadily moving lower after trading at $49.48 in December 2020. After going down by more than 50% in 2021, ChargePoint stock is worth a look for contrarian investors who are willing to assume some risk.

Chart courtesy of StockCharts.com

Revenues Expected to Accelerate on EV Adoption

ChargePoint Holdings Inc is expected to report superlative revenue growth of 62.2% to $237.6 million in fiscal 2022 and 59.4% to $378.8 million in fiscal 2023. (Source: “ChargePoint Holdings, Inc. (CHPT),” Yahoo! Finance, last accessed January 4, 2022.)

My view is that the company’s revenue growth could be much higher, depending on the level of EV adoption.

At this point, ChargePoint Holdings Inc will spend capital on building up its network and ventures. This will impact the company’s cash flow and ability to generate earnings before interest, taxes, depreciation, and amortization (EBITDA) profits, generally accepted accounting principles (GAAP) profits, and adjusted profits for at least a few years.

There is optimism that ChargePoint Holdings Inc’s adjusted loss will narrow. The company is expected to cut its adjusted loss from $7.77 per diluted share in fiscal 2021 to $0.60 per diluted share in fiscal 2022 and $0.51 per diluted share in fiscal 2023. (Source: Yahoo! Finance, op. cit.)

The company’s free cash flow has also been negative, and it’s likely years away from becoming positive as ChargePoint spends capital on building up its EV infrastructure.

As of this writing, ChargePoint Holdings Inc has $365.0 million in cash and only $27.5 million in debt, so it has sufficient capital to expand. (Source: Yahoo! Finance, op. cit.)

Analyst Take

The EV space will likely be a top growth area over the next decade. Adding EV plays to an investment portfolio via EV manufacturer stocks and EV infrastructure stocks makes sense.

I expect ChargePoint Holdings Inc to aggressively expand its infrastructure network in the U.S. and Europe as EV adoption accelerates. That bodes well for the value of CHPT stock.