In November this year, electric vehicle charging company Pod Point (LSE: PODP) joined the London Stock Exchange. It’s an EV stock that I think could do very well next year.
Why could Pod Point be a top EV stock?
When it comes to loss-making growth companies like Pod Point I think it pays to focus on revenue growth and the market opportunity, and also the route to profitability. On all three counts, I like what I see.
Pod Point generated revenue of £17.2m in the year ended 31 December 2019 (a 45% increase from the year ended 31 December 2018) and £33.1m in the year ended 31 December 2020 (a 91% increase from the year ended 31 December 2019). Revenue increased £14.6m, or 123.0%, from £11.9m in the six months ended 30 June 2020 to £26.5m in the six months ended 30 June 2021
The EV market is set to grow massively. Electric vehicle sales increased by 160% in the first half of 2021 from a year earlier.
The company has great relationships and is winning new business so I think it can become profitable.
What else is to like?
The company was founded in 2009. I don’t think Pod Point was bought to market just so the owners could make a quick buck. The current CEO founded the business and still retains almost 1.8m shares in the company. He’s entrepreneurial, having previously founded and sold supercar rental club Ecurie25, which I find encouraging.
The company has manufactured and sold over 102,000 charging points across the UK and Norway. Pod Point has also installed a public network of over 5,200 charging bays across key locations including leading supermarkets. What this shows me is that it has scale and a product customers want, which bodes well for the future.
It has developed good relationships with a wide range of customers including automotive OEMs (such as Audi, Jaguar Land Rover, Nissan, Peugeot, Volkswagen, and Hyundai), as well as fleet management companies, property developers, couriers, and leisure operators. Therefore, it has diversified income sources.
What might hold back the shares?
Competition is a risk. However, at 30 June 2021, Pod Point had 102,000 charge points, compared to approximately 58,000 charge points installed by bp pulse. Pod Point’s directors consider bp pulse to be its next largest competitor in the UK.
Evolution in the market could also either render Pod Point’s technology obsolete or reduce demand for EV charging stations, but that seems unlikely. Also, it’s loss-making, which is a risk to be aware of.
Given its desire to grow and take market share I’m not overly concerned that Pod Point is loss-making. It’s a well-worn path in emerging industries for companies to have to invest heavily to get noticed and build up their infrastructure.
I think this market is hotting up and will continue to excite investors, and I think Pod Point could do really well in 2022. Once more results come out, I’ll consider investing in this EV stock if it becomes clearer it’s on the path to future profits and is winning new business.
