The last time I weighed in on ChargePoint (NYSE:CHPT), I said, “I’d use the pullback in CHPT stock as a buying opportunity. Not only is this EV charging stock over-extended on RSI, but MACD and Williams’ %R are both on the floor.”
That was on April 1, as the CHPT stock traded at $29.52. While CHPT hasn’t moved much since then, I still believe that today’s weakness is an opportunity to buy on several key catalysts.
Electric Vehicle Demand is Accelerating
Governments all around the world want far more electric vehicles on the road.
In fact, according to Wood Mackenzie, there could be up to 700 million by 2050, as I reported on April 1. In addition, “Bloomberg NEF estimates EVs will make up 10% of all vehicles sold by 2025 and increase to more than 29% by 2030,” according to a press release from ChargePoint.
Even now, we can clearly see growth. Tesla (NASDAQ:TSLA) for example delivered 184,000 EVs in the first quarter of the year. That, by the way, is up 100% year over year. Nio (NYSE:NIO) delivered 7,257 vehicles just in March. That’s up 373% year over year as well. This is just the start, though.
The Biden Administration Could Ignite Industry Growth
The Biden administration may be eying EV tax credits.
In fact, according to Yahoo Finance contributor Brian Sozzi, “The Biden administration recently laid out plans to spend nearly $200 billion over eight years to support the surging EV industry. The administration is rumored to be eyeing an expansion of the tax incentive to consumers, which could be a big tailwind to sales at Tesla and its rivals.”
Biden also wants to deploy 500,000 new public charging stations by 2030, which is a major catalyst for companies like ChargePoint.
The Fast-Charging Collaborative
At the moment, ChargePoint and NATSO, which is a national association representing travel plazas and truck stops, are moving forward with their National Highway Charging Collaborative with a goal of deploying charging stations across the U.S.
ChargePoint says it and Natso has a goal that by 2030 they will deploy charging infrastructure at 4,000 travel centers and fuel stops across the country. They also plan to focus on rural communities to build charging infrastructure and expand charging stations in FAST Act corridors.
Earnings Growth Isn’t Too Shabby
Last year’s revenue came in at $146.5 million, up from $144.5 million year over year. Losses came in at $117.8 million, falling from $129.9 million year over year, as well. In its most recent quarter, revenue did drop from $43.2 million to $42.4 million year over year. Gross margins jumped to 21% from 20.4%.
In addition, according to Pasquale Romano, president and CEO:
In 2020, we continued to strengthen our market leadership position and expect our growth to be fueled by dozens of new EV models anticipated in 2021 across a wide range of segments and price points. With a strong balance sheet and a capital light business model, ChargePoint is well positioned to create shareholder value through broad attachment to the electrification of mobility for fleet and consumer vehicle markets.
The Bottom Line on CHPT Stock
Electric vehicle growth is only accelerating, with as many as 700 million electric vehicles on the road by 2050.
Countries all over the world want millions of them on the roads. The Biden administration may be eying EV tax credits and may deploy 500,000 new public charging stations by 2030. All of these are major catalysts for companies, like ChargePoint. Plus, even major automakers are electrifying their fleets these days.
I’d use any weakness as an opportunity to buy the CHPT stock.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.