It’s been a tough time for shares of ChargePoint Holdings (NYSE:CHPT) since the company went public via a special purpose acquisition company (SPAC) reverse merger on March 1 of this year. Right now, CHPT stock is down 37.77% year-to-date.
Things looked great for ChargePoint’s market debut heading into this year. SPAC deals were red hot on Wall Street, investors large and small were bullish on the electric vehicle sector, and the company had a compelling narrative as the operator of the world’s largest network of electric vehicle charging stations.
In the months leading up to the SPAC deal’s March 1 execution date, the company’s share price leapt 378% to just under $50. Everything was pointing to a big market debut for CHPT stock.
But then it all changed. Support for SPACs collapsed as regulator’s ratcheted up their scrutiny of the deals, investors backed away from electric vehicle securities and the short-term outlook for ChargePoint and its growth potential began to be questioned by analysts and traders. By the end of March, CHPT stock had fallen 59% from its peak and was down to $20 a share. The enthusiasm for ChargePoint’s stock had waned.
The question now is can ChargePoint reignite its spark and get investors excited about its business again?
A Bump From Infrastructure Spending
After hitting bottom at $20 a share, CHPT stock got a lift in recent weeks after President Joe Biden unveiled a $2 trillion infrastructure bill that focused largely on funding infrastructure to support electric vehicles. ChargePoint’s shares jumped 55% in the two weeks immediately after Biden introduced his infrastructure legislation and reached $31.09 before falling back to its current level. Investors saw Washington, D.C.’s support of electric vehicle infrastructure as a vote of confidence ChargePoint.
Specifically, the Biden administration aims to increase the use of electric cars that now account for just 2% of the vehicles driven by Americans. The plan allocates $174 billion towards electric vehicle manufacturing and the infrastructure to support electric cars, trucks and sport utility vehicles, including $35 billion for the research and development of new electric vehicle technologies. While the federal government’s focus on electric vehicles is no doubt beneficial to ChargePoint, some analysts caution against the company reliance on Washington, D.C. spending for its future.
The good news for ChargePoint shareholders is that the company is doing quote well on its own without any political support. In business for more than a decade now, ChargePoint today is the market leader in North America for Level Two electric vehicle charging stations that use 240 volt power, with more than 2,000 fast charging stations available for public use. In 2020, the company reported revenue of $146 million. For this year, ChargePoint reaffirmed its guidance of at least $200 million in revenue.
ChargePoint also has a huge market opportunity in front of it. Polaris Market Research forecasts that the worldwide electric vehicle charging infrastructure market will be worth $56.9 billion by 2026, and could reach $190 billion by 2030. For its part, ChargePoint has forecast that its electric vehicle charging network will grow to 2.5 million stations worldwide by 2025 and that its revenue will grow more than 50% annually through 2026.
Take A Long Position In CHPT Stock
While it may have stumbled out of the gate, the long-term outlook for CHPT stock has not changed and remains extremely positive. Electric vehicles are the future of the automotive industry and the infrastructure needed to support them is urgently needed. That the U.S. federal government has recognized this fact in its infrastructure legislation just underscores the bullish case for ChargePoint and its stock. Long-term, ChargePoint will continue to grow and prosper, and its share price should move in tandem with revenues and profits. Investors should take a long position in ChargePoint stock.
On the date of publication, Joel Baglole held a long position in CHPT.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.