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ChargePoint (NYSE:CHPT), as the operator of the world’s largest network of independently owned EV charging stations, forms a crucial node in the ongoing transition to an all-electric future.

Today, ChargePoint shares are in focus as Citi (NYSE:C) has initiated coverage of the stock with a neutral rating and a $28 price target. Citi analyst Itay Michaeli maintains a bullish overall outlook vis-à-vis ChargePoint’s fundamental story, viewing the company as being in the "right place at the right time" as a leader in the charging sphere amid the growing popularity of EVs in the US. While Michaeli concedes that ChargePoint has a recognizable brand and strong customer relationships, he believes that the company’s lack of profitability, on an EBITDA basis, until 2024 will limit the upside potential for the stock.

As a refresher, ChargePoint went public in March by merging with the SPAC Switchback Energy Acquisition Corp. The company is currently one of the largest EV charging service providers in the world, with over 4,000 partner businesses and organizations offering 115,000 unique charging points. Crucially, ChargePoint controls around 73 percent of the L2 charging network in the US. Moreover, the company also offers access to an additional 133,000 public charging points through network roaming integrations across North America and Europe. Readers should note that ChargePoint does not directly own charging stations. Rather, it employs a CAPEX-light approach by selling host businesses and organizations the necessary charging hardware – including AC level 2 to DC fast charging equipment – in order to electrify parking spaces. The resulting charging network is integrated via a mobile app.

While ChargePoint only expects to earn a revenue of $198 million in 2021, this metric is expected to grow to $602 million by 2024, the year when the company expects to print its first positive EBITDA number. Nonetheless, the advent of new competition – such as EVgo and Volta – is now a key concern for ChargePoint. As we’ve previously noted, Volta remains a very promising EV charging enterprise due to its revolutionary business model. To wit, Volta’s charging stations double as advertisement platforms for brands. In effect, the company derives all of its revenue from displaying ads in prominent places, thereby allowing its customers to charge their EVs for free.