"ChargePoint, Margin Recovery in Second Half... Stock Price Expected to Gain Momentum"

[Asia Economy Reporter Minji Lee] There is a forecast that ChargePoint's stock price will rebound as it begins to actively improve margins in the second half of the year. ChargePoint is the number one operator of electric vehicle charging networks in North America.

On the 19th, ChargePoint's stock price was indicated at $14.03 compared to the previous trading day. Since the beginning of the year, the stock price has fallen by more than 29%. The downward trend was due to an unfavorable market environment for growth stocks and the low likelihood of turning a net profit in the short term.

Although revenue continued to grow rapidly, profitability deteriorated due to supply chain disruption issues. In the first quarter of 2023 (February to April), revenue and gross profit were $82 million and $12 million respectively, marking increases of 101.5% and 31.4% compared to the same period last year. Revenue surpassed both the guidance range of $72 million to $77 million and the market expectation of $76 million. Operating loss continued at $89.83 million. Adjusted gross profit margin was 17%, decreasing for the second consecutive quarter due to margin pressure from supply chain disruptions.

Sales of chargers led revenue growth, but gross profit was overtaken by the service segment. Charger sales revenue was $60 million, and service revenue was $18 million, growing 122% and 63% respectively compared to the same period last year. Charger sales margins were significantly impacted by increased raw material prices, transportation costs, and reduced shipments of high-margin products due to parts supply issues. The company successfully attracted over 1,000 new customers aggressively, confirming positive demand creation capability. The order backlog in the first quarter increased by 35% compared to the previous quarter, with sales growing significantly in fleet and home charging systems from the demand side.

By region, the revenue share rapidly increased with North America at 80% and Europe at 20%. European revenue was $16 million, growing 353% compared to the same period last year. Hanwi, a researcher at NH Investment & Securities, said, “Despite the unstable macro environment, the company is maintaining a strategy focused on expanding scale rather than short-term profitability, aiming to secure stable subscription revenue in the mid to long term through customer lock-in. As customized financial solutions begin to be offered to potential customers, sales momentum could strengthen further once supply chain issues ease.”

The company's second-quarter revenue guidance is $96 million to $106 million. Despite margin weakness, it positively maintained the annual adjusted gross profit margin (GPM) guidance of 22% to 26% and the forecast for turning positive free cash flow (FCF) in 2024. Researcher Kim Jae-im explained, “Margin improvement from in-house production of chargers in Europe, easing of supply chain issues for high-margin product lines in the second quarter, and active price pass-through effects could lead to a full rebound in adjusted GPM starting in the second half of the year. If margins normalize in the second half, the stock price could also gain momentum.”

This content was produced with the assistance of AI translation services.