ChargePoint (CHPT) Stock Is Trending Right Now, Here’s What To Know
Many electric vehicle (EV) manufacturers have gone public over the past year. It is also from the EV space where many special purpose acquisition companies (SPAC) saw the opportunity to capitalize on the red-hot industry. And that helped make SPACs a popular route to go public. If you want to invest in an emerging sector like EV, you may want to keep an eye on the level of risk that you are taking. One way to play the EV space is to invest in a pick-and-shovel company for EV growth. While I’m generally not a big fan of EV SPAC myself, Switchback Energy was not like the others. That’s because it has significant value waiting to be unlocked.
Now, the merger between Switchback and ChargePoint (NYSE: CHPT) has completed. Investors may have different expectations and are focusing on what ChargePoint could bring to the table. For starters, ChargePoint is a leading electric vehicle charging network in North America and Europe. It is regarded as a perfect choice for investors looking to gain exposure in the space. Why is that? The answer is simple. Because investing in CHPT stock allows you to participate in the mega EV trend without having to pick a “winner” from a pool of EV stocks.
Although the merger deal was pretty exciting, the public debut of CHPT stock this week wasn’t what many were expecting. That’s because CHPT stock has dropped more than 10% since it began trading under its own ticker. Some may say it has to do with its massive rally before the merger. But it looks more like a general market pullback that dragged CHPT stock along. Either way, the pull-back this week provides a nice set-up for investors to buy CHPT at a discount. If you are wondering if CHPT stock could bring value over the long term, read on.
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ChargePoint Is The Leader In The EV Charging Network Space
ChargePoint is the No. 1 charging network in North America by a significant margin. But when it comes to stock price appreciation, Blink Charging (NASDAQ: BLNK) has been the superior one (for now). If we were to compare, ChargePoint boasts a whopping 73% market share of networked Level 2 charging. That compares to the 8% share that Blink commands, according to the Alternative Fuels Data Center (AFDC).
When looking for any stocks to invest in, investors should not overlook the fundamentals. That’s especially relevant for any investors contemplating investing in CHPT stock or BLNK stock. For ChargePoint, revenue came in at $147 million in 2019. But the company expects a slowdown in 2020 due to the impacts from the COVID-19 pandemic. In contrast, Blink reported just $2.8 million in 2019 and had generated $3.8 million in the first three quarters of 2020. Both companies’ revenue should recover as the world slowly returns to normalcy. Even though ChargePoint may have yet to reach profitability, the company believes that the cash raised from the SPAC deal will be sufficient to fund its operations until it reaches profitability.
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CHPT Stock & Soaring EV Sales
The EV space may be full of hype as some would argue that’s where we are right now. But no matter how you slice it, the sales delivery from Tesla (NASDAQ: TSLA) and Nio (NYSE: NIO) have been positive, to say the least. So far, we have continued to see an increase in delivery sales from most EV manufacturers. And that’s a healthy sign for the industry. The hype might have played a factor in recent months. But we are here right now because there’s true potential in the EV space. Global warming poses a real threat to us and our children, and you know it.
Europe is buying EVs at a record pace and has overtaken China as the world’s biggest EV market. The surge in European EV sales was fueled by government subsidies. That brought the continent’s global EV market share to 43% last year. On the other hand, sales of petrol and diesel vehicles are falling, signaling that the disruption is taking place. Since ChargePoint also has a strong presence in both the European and American markets, the company is in a strong position to benefit from the secular EV growth in the long run.
Climate Change Is A Real Problem
In December 2020, the European Union set a goal to reduce its greenhouse gases by 55% by 2030. That is a more ambitious target than its previous goal of 40%. According to an estimate by Bloomberg, EVs need to represent nearly 60% of vehicles sold in the EU for the region to achieve a 60% reduction in emissions by 2030. So, it’s likely that this new target will force nearly 55% of vehicles sold within the next nine years to be EVs. Moreover, in 2020, EVs reportedly already accounted for “11.5% of new car sales in the region”. Those are both great developments for ChargePoint stock.
Of course, it is no surprise that EVs represent a much smaller percentage of vehicle sales in the U.S. But EV demand is also expected to jump this year as the new Biden administration is really serious about its green initiatives. According to Edmunds, EVs will make up 2.5% of total automobiles sold in the U.S. this year. That’s up from 1.9% in 2020.
According to a report by Grand View Research, the U.S. charging market could grow at a compound annual growth rate (CAGR) of 38.9% from now to 2028. This market is expected to reach $10.8 billion by 2028. On top of that, the U.S. government is also aiding the growth of the EV charging stations market by investing in charging infrastructure. It is also providing a whole host of incentives and subsidies. That said, the demand for ChargePoint’s stations should surge as EV sales continue to jump higher.
By and large, ChargePoint stock has been one of the best stocks to buy and take advantage of the exponential growth of the EV market. All else being equal, ChargePoint should do well no matter who comes out on top in the EV market. After all, all EV manufacturers will need EV charging infrastructure. And ChargePoint is the dominant player in this field. Hence, with the recent weaknesses in CHPT stock and the broader EV industry, will this be a great opportunity to accumulate shares at discount? You be the judge.