For investors, it’s an exciting time of transition as Switchback Energy Acquisition (NYSE:SBE) has fulfilled its purpose as a special purpose acquisition company (SPAC) and ChargePoint (NYSE:CHPT) went public on March 1. So now, the company is trading on the New York Stock Exchange as CHPT stock.
It’s the culmination of a long-awaited moment in February, when Switchback’s shareholders finally voted in favor of the reverse merger.
Now, another dramatic moment is upon us. Namely, ChargePoint will release its fiscal results for the fourth quarter of 2020, as well as the full fiscal year ending on Jan. 31, 2021, after market closes on March 11.
This leaves current and prospective investors with a burning question. Is it time to add ChargePoint shares to your portfolio? Let’s see if we can achieve clarity on this question, starting with a little bit of technical analysis.
A Closer Look at CHPT Stock
As I alluded to earlier, CHPT stock used to be SBE stock. And since it was a SPAC stock, it stayed close to the $10 level for a number of months in 2020.
Once the public learned that Switchback was planning to merge with a company involved in the electric vehicle sector, the bulls really started charging ahead (pardon the pun).
They ran the share price up to a 52-week high of $49.48 on Dec. 24 of last year. Hopefully they took profits before the end of the year, as SBE/CHPT stock started to decline after that.
On March 5, 2021, the stock closed at $26 and change. At this point, the bulls really need a catalyst to put the stock’s trajectory back in the right direction.
Could the upcoming earnings event be exactly what they’re hoping for?
A Niche Leader
To be honest, I’m not against the idea of owning CHPT stock even if you don’t believe the company will beat people’s earnings expectations.
ChargePoint’s most well-known charging-station rival (among U.S. investors, at least) is Blink Charging (NASDAQ:BLNK). Some quick figures should convince you that ChargePoint is the more established company:
- Founded back in 2007
- Operates more than 115,000 charging ports globally
- The company aims to increase the number of charging ports to 2.5 million by 2025
- ChargePoint has $600 million of cash on its balance sheet
- The company has predicted that its revenues will grow 60% annually through 2026
- Moreover, ChargePoint forecasts that its revenues will increase more than 15-fold, from $135 million in 2020 to $2.069 billion in 2069
Those figures are astounding, yet credible. As InvestorPlace contributor Mark R. Hake has stated, it’s been estimated that by the year 2035, more than half of all car sales will be electric vehicles.
In other words, the industry is growing quickly and we can expect that niche leader ChargePoint will grow along with it.
Bullish Then, Bullish Now
I provided a fuller head-to-head comparison of ChargePoint versus Blink back in September.
At that time, I liked SBE/CHPT stock and I still like it today. And apparently, I’m not alone in my favorable assessment of ChargePoint prior to the earnings event.
Calling CHPT stock a unit play on electric vehicle adoption, Oppenheimer analysts very recently initiated coverage on the stock with an “outperform” rating.
Like me, the Oppenheimer analysts seem to view ChargePoint as a leader in its niche:
“We view CHPT as the leading play on electric vehicle charging infrastructure with proprietary ASIC-driven, software-defined hardware and cloud-based networking solutions that enable seamless user experience and asset management.”
Oppenheimer’s $39 price target is not unreasonable, in my opinion. After all, the stock price (when it was SBE) has gone higher than that.
The Bottom Line
There’s no guarantee that ChargePoint will post an earnings “beat.” And, in the short term, the share price will probably fluctuate and flop around.
It seems that the Oppenheimer analysts are taking a longer-term view of CHPT stock. That’s a sensible strategy.
Regardless of the stock’s movements after the earnings event, ChargePoint should remain a niche leader for the foreseeable future.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.