Switchback Energy Acquisition (NYSE:SBE) stock almost doubled in value since September and Plug Power shares managed to do the same. But which stock will give you a better ROI going forward?
As the world shifts from fossil fuels to sustainable energy, we will need a new kind of infrastructure to support our electricity needs and transportation. ChargePoint and Plug Power are two electric infrastructure companies operating in different segments.
ChargePoint is a California-headquartered EV infrastructure company founded in 2007. ChargePoint is currently the largest independent EV charging infrastructure operator in the world with 150000 charging sites across 14 countries. ChargePoint too has its own cloud-based system allowing customers to find and book any of their stations. In 2020, ChargePoint reverse-merged into Switchback Energy, a SPAC(Special Purpose Acquisition Company) focused on renewable energy. The deal will give ChargePoint $683 million in proceeds to advance its business.
Plug Power is a developer of hydrogen fuel storage and electricity generation systems. However, they also develop storage systems and hydrogen engines for commercial vehicles like forklifts, cargo vehicles, drones, etc. The company went public in the late ’90s and was a stock market darling during the dot-com bubble. The stock was moving sideways from then until Amazon inked a deal with a company for its fulfillment centers that included stock-warrants. The company has a market cap of $9.55 billion and is up 600+% this year after outperforming projections for the previous two quarters.
ChargePoint too operates on a host and ChargePoint-owned business model that is both capital-light and high-margin. The company provides complete turn-key solutions to hosts under different arrangements such as host-owned, Chargepoint-owned, and hybrid-ownership. Each arrangement entails different cost-ownership and revenue-sharing structures. ChargePoint also generates recurring revenue from hosts for its cloud platform SaaS. As a first-mover in the space, ChargePoint has a far bigger footprint than any of its competitors.
Plug Power manufacturers complete hydrogen power systems for its customers, who are all commercial ones. The company has a number of verticals including on-site hydrogen storage and electricity and hydrogen powertrains for a variety of commercial applications.
The company has recently revealed its roadmap for the next 4 years, at the end of which it aims to have $1 billion in revenue and $200 million in EBITDA. The company is currently the biggest buyer of liquid hydrogen in the world. PlugPower has plans to generate $200 million in revenue from on-road applications. Their ProGen hydrogen system is based on a modular philosophy and can power electric motors from sub-1k Wh-250kWh, making it applicable to all classes of vehicles, from consumer to freight. The company plans to enter the hydrogen production market and target average daily production of 100 tons by 2024.
Since ChargePoint has just completed its SPAC deal, it is yet to declare any financial results. In 2019, ChargePoint generated a revenue of $147 million and a net loss of $133 million. However, the company stated that it expects hockey-stick growth in revenues. The company aims to grow its network to 2.5 million charging ports by 2025. It expects revenues to grow from $135 million in 2020 to $2.069 billion by 2026, implying a 57% compounded growth rate.
The company is currently trading at a revenue multiple of a little over 9x. ChargePoint has a 51% upfront and 49% recurring revenue ratio. In North America, they have a 73% market share, more than 7x its closest competitor(Blink). The company has given revenue guidance of $198 million and $346 million for FY21 and FY22. The company is currently trading under Switchback Energy and has a market cap of $1.34 billion.
For Q3, PlugPower outperformed all expectations and its own guidance by reporting revenues of $125 million, up 106% YoY, and 74% QoQ. The company has raised its 2020 guidance from $310 million and $330 million. The company deployed a record 4100 fuel cell systems and 13 hydrogen refueling systems. Adjusted EBITDA for the quarter was $24 million, which is very promising as it is already well above the company’s target of 20% operating margin by 2024.
While both companies have a very bright future due to a rising demand for EVs and hydrogen systems, Plug Power is definitely the choice with a higher upside, but only for investors with a big risk appetite. Plug Power has positioned itself in very forward-looking verticals and this could pay-off in a very big way for the company.