What’s Powering ChargePoint Stock Higher This Week?
Much of the focus of electrification has been on automakers. But what good is an electric vehicle (EV) without the charging stations? When legendary automakers like General Motors (NYSE: GM) and Ford (NYSE: F) are ramping up their EV offerings to compete with the red-hot names like Tesla (NASDAQ: TSLA) and Nio (NYSE: NIO), there is a good chance that this megatrend is likely to stay. However, full electrification is hard to come by unless an equally large growth spurt takes place in the EV charging space. For this reason, investors have been on the lookout for the best EV charging stocks in the stock market today.
As that happens, only a handful of EV charging companies will turn into global giants in the future. That said, ChargePoint (NYSE: CHPT) stands a good chance to be a global player in the EV charging industry. For the uninitiated, ChargePoint went public by merging with a special purpose acquisition company, Switchback Energy. 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. If you are wondering if CHPT stock could bring value over the long term, read on.
What Infrastructure Plan Means For CHPT Stock
Since going public, its stock performance has been rather underwhelming. Not this week, CHPT stock skyrocketed 19% higher on Wednesday’s trading. This came after the progress update regarding the National Highway Charging Collaborative. To date, ChargePoint and NATSO have installed 15 DC fast charging spots in the first year. For those unfamiliar, this is an initiative that will leverage $1 billion in public and private capital to deploy 4,000 charging stations to travel plazas and fuel stops by 2030.
“Together with ChargePoint, we are harnessing the nation’s vast fuel retailing network to ensure that drivers of electric vehicles have a reliable place to fuel,” said NATSO President and CEO Lisa Mullings.
Bloomberg NEF estimates EVs will make up 10% of all vehicles sold by 2025 and increase to more than 29% by 2030. With President Joe Biden’s call for broad investment in EVs, one could expect a flood of electric vehicles set to hit the market as part of the plan in combating climate change. Subsequently, it creates a huge market for various products and services within EV charging. That would benefit companies including ChargePoint and Blink Charging (NASDAQ: BLNK). The package will support $174 billion being allocated to encourage the adoption of EVs, including money for buyers of EVs, and programs to boost charging infrastructure reports CNBC.
“ChargePoint’s ongoing effort to significantly expand access to charging across cities, rural communities, and along highways is core to our mission and the collaboration with NATSO is already making significant progress toward that goal,” said Colleen Jansen, Chief Marketing Officer, ChargePoint.
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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. 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 impact of 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.
The Need For EV Charging Infrastructure Is Apparent
No matter how you put it, the sales deliveries from Tesla and other top electric vehicle manufacturers have been positive. With the rapid pace of EV adoption in the market, the need for more charging stations is becoming more apparent. Although Tesla has been building out a charging network specifically for its cars, we all know that is not going to be enough.
With so many EV start-ups diving right into the space, it is no longer a winner takes all business. Now as many private industry and government leaders are planning a coordinated effort to push for electrification, it makes investing in EV charging stocks more attractive. I do agree to some extent that the EV industry might have gotten ahead of itself previously. The hype was certainly there. But we are here right now because there’s true potential in the EV charging space. Global warming poses a real threat to mankind, and you know it.
All in all, ChargePoint stock is in the red-hot business of EV charging. There may be skepticism that now is still too early to dive in. But it’s easy to forget that the stock has fallen by over 40% from its all-time high in December. The addressable market we have here could set up massive gains for investors if they are in it for the long run.
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. If you believe that growth in electrification of the transportation sector is set to continue, it makes sense to put CHPT stock on your watchlist right now. Could we be looking at a multibagger in the years to come?