Why ChargePoint Holdings stock climbed 24% in October


What happened

There has been a lot of interest in the stocks of electric vehicle (EV) charging networks as EVs seek to take a much larger share of the transportation sector. But there is still questions about the ability of these companies to become sustainable profitable. This concern has resulted in a drop in Charging points (NYSE: CHPT), which has fallen more than 38% since the start of the year. But that was not the case in October, when ChargePoint shares climbed 24%, according to data from S&P Global Market Intelligence. And there’s a reason the peak may continue until November.

Image source: Getty Images.

So what

Investors anticipated the passage of the bipartisan infrastructure bill which has recently been at the center of political debate. The bill contains $ 7.5 billion allocated to building an infrastructure for recharging electric vehicles, as well as an additional $ 5 billion dedicated to replacing buses, including school buses, with zero-emission vehicles. . Investors raised stocks, including industry leader ChargePoint, hoping the bill would pass, and it has now become a reality.

Now what

ChargePoint is a leading network provider in the United States and is expanding its business in Europe. As of July 31, the company had more than 118,000 charging ports, including more than 3,700 DC fast chargers. More than 5,400 of those ports were in Europe, where it is looking to expand with the acquisition of a leading European mobility charging platform that it closed in October.

And unlike several companies in the electric vehicle sector that went public in recent mergers with ad hoc acquisition companies, ChargePoint not only met its revenue guidance when released, it also increased its forecast for calendar year 2021 sales. In its latest quarterly financial update, the company reported revenue growth 61% year-over-year, and it increased its estimate of full-year sales by 15% to $ 230 million in the middle of the new forecast range.

Since August, ChargePoint has added two companies to its list to strengthen its position in advancing vehicle electrification in Europe. But the prospect of passing the infrastructure bill in the United States is likely what prompted investors to retreat from stocks in October. Now that the bill has passed the House of Representatives and is heading towards President Biden’s signing, it is possible that there is continued momentum in the stock. Ultimately, however, how these expenses potentially increase revenue and bring the business closer to profitability will determine the long-term direction of the business and the action.

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Howard smith holds shares of ChargePoint Holdings Inc. The Motley Fool does not have any position in the mentioned shares. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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