Charge Enterprises, Inc. (CRGE) consists of a portfolio of global businesses with a vision to build the electrification and telecommunications infrastructure by providing seamless end-to-end solutions for EV charging infrastructures and 5G wireless intelligent networks. The company aims to address and service requirements for EVC and WNI which includes 5G, tower, distributed antenna systems (“DAS”), small cell, and electrical infrastructure. CRGE operates across two key business segments: Telecommunications and Infrastructure.

On April 7th, Charge Enterprises announced its plans to become a public company starting trading on the Nasdaq on April 12th after it had received approval for the uplisting of its shares. Later on April 22nd, the company announced a private offering of shares and warrants. Charge Enterprises entered into a securities purchase agreement with a subsidiary of Island Capital Group for the issuance of up to 1.4 million shares at $7 a share. CRGE’s gross proceeds from the stock offering are expected to be between $7.5 and $10 million, and the company plans to spend it on general corporate purposes and working capital. 

It is important to note that the company’s share price spiked up to as high as $8.46 after the uplisting. However, CRGE has given back some of those gains since then, trading at about $6 right now. 

With that being said, today, I am going to analyze Charge Enterprises to find out whether the company’s stock will continue to soar in the forthcoming weeks.

Recent Developments 

On January 20th, Charge Enterprises revealed that it had closed the acquisition of EV Group, a group of companies focused on national real estate assets and real estate solutions for commercial and fleet operators requiring parking, maintenance, and EV charging depot resources. Under the terms of the deal, CRGE paid $18.7 million in cash and additional stock. This move allows Charge to capitalize on the increasing demands of commercial and fleet management solutions for parking, storing, and electrification of vehicles. The company’s CEO Andrew Fox, said, “This is a significant growth area for

Charge as we expand our geographic footprint and capabilities to support EV depot solutions for the electrification of commercial vehicles.”

Charge Enterprises’ Financial Performance 

To determine the fundamental factors of the Charge stock’s financial health and future growth prospects, let’s dive deeper into the company’s recent 10-K report and analyze key operating metrics. Also, I intend to analyze proforma results, which include a full three- or twelve-month period for all operations, for comparability to prior period figures.

Charge Enterprises’ total revenue for its fiscal year, which ended December 31rd, 2021, decreased about 15% year-over-year to $516.3 million, caused by changes in the customer mix and fluctuations in wholesale traffic volumes within the Telecommunications segment. The lion’s share of CRGE’s total revenues comprises telecommunications revenue, which totaled $452.77 million, or 87.7% of overall net revenue in FY21. Moreover, the company’s Infrastructure revenue was $63.54 million in FY21, representing a 3.3% increase compared to a prior-year period. Besides, the company’s FY GAAP EPS came in at ($0.33).

Furthermore, the company’s loss from operations grew by 1730% year-over-year to $36.62 million in FY21. This enormous increase was primarily related to increased stock-based compensation and higher general and administrative costs.

As a result, the company’s net loss stood at $48.99 million in 2021, up 63.3% compared to a loss of $30 million in 2020.

Cash used to run the company’s operations during the fiscal year of 2021 was about $2.9 million, down from $6.5 million in 2020. As of December 31st, 2021, the company reported a strong balance sheet with cash and cash equivalents of $18.24 million and investment in marketable securities of 9.62 million. Hence, the company shouldn’t face any liquidity problems for at least the next 12 months.

The Bottom Line

I remain neutral on CRGE stock for now. The company continues to grab market share aggressively by acquiring companies in its area. However, we also need to see the company’s ability to capitalize on these purchases. As for now, the current trend of deteriorating revenues from the Telecommunications segment is a major concern for me. In addition, the company’s stock remains highly volatile at the moment, which is not preferred for long-term investors. On the positive ground, the company has a healthy balance sheet, which

should support its future organic growth. Putting it all together, I will closely monitor the afterward company’s reports to see any improvements in its top-line growth figure.   

CRGE shares were trading at $5.98 per share on Monday morning, down $0.27 (-4.32%). Year-to-date, CRGE has gained 69.89%, versus a -11.06% rise in the benchmark S&P 500 index during the same period.

About the Author: Oleksandr Pylypenko

Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist. More...

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