When it comes to electric vehicle (EV) charging stocks, EVgo Inc (NASDAQ:EVGO) is set to outperform. ChargePoint Holdings Inc (NYSE:CHPT), however, struggles to maintain momentum.
EVgo: Charging Ahead
The Los Angeles-based company has a scalable business model and higher utilization.
EVgo's owner-operator model has given it a distinct edge in a market where EV sales have been slower than anticipated. According to JPMorgan's Bill Peterson, EVgo's fast-charging business is "scaling well with higher utilization and charge rates." Unlike its competitors, EVgo's revenue is directly tied to every kilowatt of electricity dispensed, allowing it to grow despite a muted EV demand environment.
The company has been delivering solid results, with network throughput growth, stable margins, and better operating leverage. With the potential backing of a Department of Energy loan commitment, Peterson sees EVgo's "pace of network buildout" accelerating, helping the company turn profitable by the end of 2025. The $7 price target reflects this optimistic outlook, as Peterson puts EVgo on his Positive Catalyst Watch.
ChargePoint: Running On Fumes
ChargePoint's business model relies heavily on hardware sales, which have been hit hard by slower-than-expected EV adoption.
Peterson downgraded the stock to 'Underweight,' citing concerns about its profitability and the lack of visibility into future growth.
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While ChargePoint's software margins are high, the company's hardware business hasn't scaled enough to move the needle.
As Peterson points out, "ChargePoint's path to profitability remains less clear at this stage." The Campbell, California-based company's dependence on third-party site hosts to add more chargers leaves it exposed to underperformance, especially as demand from fleet and commercial customers remains sluggish.
EVgo Takes The Lead
In the current environment, EVgo's ability to control its own destiny and grow utilization sets it apart from ChargePoint.
With its fast-charging owner-operator model firing on all cylinders, EVgo is poised to lead the EV charging race, while ChargePoint is left in the slow lane.
- Why EVgo Stock Is Charging Up Today
Image: Courtesy of EVgo, Inc.