Why ChargePoint shares fell 25% last month

What happened

Owners of Charging points (NYSE: CHPT) the stock needed a strong stomach to end 2021. After gaining 24% at the start of the fourth quarter in October, shares of the electric vehicle (EV) charging network company ended the year with a down 25.4% in December, according to S&P Intelligence global market data.

So what

All the ups and downs came as a bipartisan infrastructure bill was being debated in Congress. The bill now passed contains $ 7.5 billion allocated to building the country’s electric vehicle charging infrastructure, as well as an additional $ 5 billion to replace municipal and school buses with zero-emission vehicles. But the impetus given to ChargePoint stocks by this future advantage was replaced by concern investors showed in December for growth stocks like ChargePoint. Many, like ChargePoint, are spending money now to seek profit down the road.

Image source: Charging point.

Now what

As the prospect of rising interest rates and growing competition in the electric vehicle industry prompted investors to pull out of these names in December, ChargePoint gave investors positive news during the month. .

The company has announced a significant new addition to its board of directors. Former U.S. Transportation Secretary and Labor Secretary Elaine Chao was appointed to the board on December 2. Given his distinguished career and the aforementioned infrastructure investments planned for the electric vehicle charging industry, his addition to a senior position within the company looks potentially beneficial.

The December third quarter earnings report also found that the company had raised its revenue forecast for 2021 for the second time in six months. Management now expects 2021 revenue to be between $ 235 million and $ 240 million. As of June, the company was expecting 2021 revenue of up to $ 205 million at the high end of its lineup.

But investors appeared to be focusing more on the bottom line after the third quarter report. The company reported a net loss of $ 69.4 million, which was more than expected and went from a loss of $ 40.9 million to the same period a year earlier.

ChargePoint continues to invest in growing its hardware investments, hoping to turn them into a profitable revenue stream as the conversion to electrified transportation accelerates. But investors will need to resist volatility along the way. It remains to be seen whether the stock will recover in 2022 or beyond. But the decline in equities in December should serve as a reminder that this is a long-term investment that should remain in an aggressive part of a portfolio.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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