EVgo vs ChargePoint: One is a better EV charging stock

EVGo (NASDAQ: EVGO) and ChargePoint (NASDAQ: CHPT) stock prices have continued falling this month even as the Nasdaq 100 and S&P 500 indices jumped to a record high. EVGO has crashed by over 32% this year, giving it a market cap of over $724 million. 

ChargePoint’s stock has also dropped by over 36% this year as its valuation moved to over $630 million. Other electric vehicle charging companies like Blink Charging and Wallbox have also tumbled in the past few years. 

This decline has benefited short sellers since ChargePoint and EVgo are some of the most shorted companies in Wall Street. ChargePoint has a short interest of 28% while EVgo’s stands at almost 33%. 

Short interest is an important number in the stock market as it refers to shares that have been sold short but not yet covered. Short selling is a situation where people borrow shares, sell them, and then buy them when they drop. In this case, they benefit when the stock is in a strong downward trend. 

EVGO vs ChargePoint stocks

EVgo’s business is doing well

EVGo is highly shorted even as its business continues doing well. The most recent financial results showed that its revenue rose by 118% to $55.2 million in the first quarter as the network throughput soared to a record high of 53 gigawatt-hours. 

The company continued adding the number of locations. They jumped by 250 in the quarter, reaching almost 4,000 stores. Also, the number of new customers rose by 109k in Q1, meaning that it is seeing robust growth.

EVgo also made other improvements during the quarter as it reduced its costs, leading to a 43% improvement in losses to $28 million. 

While the company is still burning cash, it has a solid balance sheet with over $175 million in cash. Its total current assets stood at $239 million. 

Analysts expect that its business will continue doing well in the next few years. Its annual revenue is expected to move from $160 million in 2023 to over $250 million this year and $347 million in 2025. The company has constantly beat analysts’ estimates.

Most analysts, including from Cantor Fitzgerald, Benchmark, Evercore ISI, and Citigroup have a bullish rating, with the average stock estimate being at $5.60. Therefore, there are signs that EVgo stock will have more upside later this year.

ChargePoint stock faces headwinds

While EVgo business is doing well, ChargePoint is still in trouble. Its first-quarter revenue dropped by 18% in the first quarter to $107 million. This decline happened as the networked charging systems revenue fell by 34% while its subscriptions rose by 27% to $26.4 million. 

The company’s balance sheet is also a bit strained, meaning that it could need to raise cash later this year. It held about $292 million in cash and short-term investments and a $150 million revolving facility. 

ChargePoint generated a net loss of over $71 million in the first quarter and over $457 million in 2023. This means that the company may be forced to raise more cash later this year, which could lead to more solution. ChargePoint also has over $284 million in long-term debt. 

Analysts expect that ChargePoint’s revenue will grow by just 2% this year to $517 million while its loss per share will be 32 cents.

EVgo vs ChargePoint stocks: better buy?

The EV charging industry has gone through major headwinds in the past few years. These challenges are in line with what is happening in the EV industry which has triggered a sharp decline in EV stocks like Lucid Group and Tesla. 

I believe that EV charging companies will ultimately recover since the number of EVs will continue growing. If this happens, EVgo will likely be a better stock to invest in than ChargePoint. It is still growing and has a better balance sheet.