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ChargePoint Has the Right Product, But Timing Is the Question

In my last attempt at providing commentary for ChargePoint (NYSE:CHPT) – now armed with its own ticker symbol, I might add – I mentioned that CHPT stock faced threats from the tragic Texas winter storm.

A ChargePoint electricity port in a parking lot in Irvine, California.
Source: David Tonelson /

While extreme weather events could hit anywhere, the concept of renewable and clean alternative energy sources (which electric vehicles are a part of) nevertheless took center stage.

Was the insinuation that frozen wind turbines caused the tragic loss of life an unfair analysis? Well, opinions are opinions – and everybody has them. Certainly, I think you can make the case that we’re not ready for 100% renewable energy if we don’t have adequate battery storage systems in place. If you want my take, I think the Texas cold snap confirmed the importance of energy diversity.

And that is the issue for EVs and in the case of CHPT stock, infrastructures that serve the EV rollout. You see, if the power grid goes down, you’re not going to be able to get around much. Yes, battery storage units have found their way into the consumer retail market. But those units’ storage capacity is limited.

Prior to the cold snap, range anxiety dominated consumer concerns – enough so that it stymies conversion from internal combustion to electric. As you probably know, EV proponents have been out in full force, reminding everyone how stupid range anxiety really is.

On average, Americans drive about 26 miles daily. So even an EV with a limited range of 100 miles should be good enough for most consumers. However, as EV bulls are finding out, facts don’t necessarily trump feelings in American society. Because we generally don’t allow nuances in our public discourse – look at our two-party political system as an example – long-established feelings carry substantial weight. That’s a problem for CHPT stock.

Logically, ChargePoint has a dependency problem. Without a robust EV rollout, there’s no need to build EV charging infrastructure.

CHPT Stock Is Also Dependent on the Economy

When I last discussed CHPT stock on March 1, shares were priced at $30.11. Not only that, they were already in a severe downtrend. Therefore, it was somewhat risky to suggest a cautionary take when the equity unit had hemorrhaged nearly 35% from its closing peak.

Still, at time of writing, I find myself looking at a nearly 33% loss from the March 1 session. But why is the volatility so dramatic when clearly, EVs and the electrification of transportation is our future?

I go back to the mentality of the average American consumer. When you have a society where all the important decisions come down to Democrat or Republican, Coca-Cola (NYSE:KO) or PepsiCo (NASDAQ:PEP), you tend to lose nuance. And nuance is where much rational thinking resides. So, it’s no surprise that poorly structured opinions – when said enough times or from a popular source – lever an undue influence.

But the problem for CHPT stock doesn’t just revolve around consumer behaviors. You must also take into account the economy. That’s why I fundamentally like the concept of Lucid Motors, which will reverse merge with Churchill Capital Corp IV (NYSE:CCIV). Lucid focuses on the upper income strata, where people don’t have to worry about range because consumers here can afford the very best – and have a backup combustion vehicle just in case.

Unfortunately, the lower income strata do not have that luxury, such as homes with garages. Heck, I would make the argument that even some of the upper-middle-income bracket don’t have the safety margin to comfortably make the jump to EVs.

Yes, admittedly, the declining initial weekly jobless claims report is trending in the right direction, as in downward. But much of that is dependent on how we handle the pandemic. Not surprisingly, jobless claims tend to ebb and flow with novel coronavirus cases as state and local governments hand down lockdown or other restrictive measures.

If we have another outbreak, that could reverse our gains. Also, how we can comprehensively move out of this mess is a question that hangs over the economy.

Abstaining from EVs Is the More Practical Bet

Our own Chris Markoch recently made a salient point about CHPT stock, writing:

But the company’s path to profit is dependent on widespread EV adoption. This is like a child knowing that they are getting a big gift on Christmas morning, but it’s only March. It’s a long time to wait. And that’s what I believe ChargePoint stock is facing, a longer wait than it may expect.

Knowing exactly when that point of mass integration is becomes the million-dollar question. EVs have made tremendous strides, steadily making believers out of critics. However, it’s also fair to point out that the combustion engine has been making technological strides as well. Plus, the platform has provenance.

Through recessions and depressions, social strife to world wars, acts of terror and acts of God, the combustion engine continues to chug along. Today’s combustion cars are the cheapest, safest and most efficient they’ve ever been.

True, it’s not the cleanest solution but it’s arguably the most practical for the immediate future. That doesn’t bode well for CHPT stock for the time being.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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