In January I suggested investors hold off buying into ChargePoint (NYSE:CHPT) stock, then trading under the name Switchback Energy.
I was concerned about fast-charging competitors. I was referring to companies whose chargers run at 480 volts and can thus recharge an electric car in under an hour. ChargePoint calls its version of the technology DC Fast, branding such stations as Express or Express Plus.
When electric cars were curiosities, ChargePoint’s 240-volt stations seemed ubiquitous and free. Now that we’re getting serious about electric cars, owners want the quick fill-up they got at a gas station, and they can’t get it at 240 volts.
As investors have recognized this fact, ChargePoint stock has fallen. It’s down 37% from when I wrote that January column, and 45% on a year-to-date basis,
As the number of electrics has increased, a backlash has also developed.
Tesla (NASDAQ:TSLA) owners are familiar with ICEing. Gas-powered vehicle owners deliberately park next to Tesla SuperChargers to keep them from being used. Now some stations are being vandalized. In one notorious German case, someone stuffed hamburger into the connector.
This is adding to the chicken-and-egg problem facing any mass market for electric cars. You don’t want to buy until you can get a quick, reliable charge. You won’t see vast networks of quick, reliable chargers until we have a mass market. Analysts call the resulting hesitancy “range anxiety.”
The Biden administration wants to put $15 billion into scaling charging alongside the market. But it might do better simply mandating a universal plug, as in Europe. Until it does, Tesla will retain an enormous market advantage. Analysts are also concerned about whether the electric grid will handle the load of a big electric car ramp-up.
Still, our Louis Navellier says now may be the time to get back into ChargePoint stock. He blames the semiconductor chip shortage, which is slowing electric vehicle production, for the stock’s recent fall. There has been a natural easing of interest in electrics lately, as early excitement is replaced by real plans.
Navellier believes investors were also disappointed by ChargePoint’s March guidance, estimating $200 million in revenue this year. If ChargePoint hits that number, you’re still paying 37x revenue for it, at its May 3 opening price of $25.35/share.
Navellier believes these are temporary growing pains. The company has announced integration with Android Auto, which lets drivers find a charge from their car dashboards.
General Motors (NYSE:GM) also signed to integrate ChargePoint stations into its Ultium Charge platform, again aiming to simplify the search for a charge. One analyst says ChargePoint is now trading at a “fire sale” price.
One More Thing
If you’re worried about ChargePoint’s weakness at 480 volts, and I am, there’s an alternative investment for you.
It’s another special purpose acquisition company (SPAC), called Climate Change Crisis Real Impact I Acquisition (NYSE:CLII). It’s taking a 480-volt network called EVgo public, which claims to be powered entirely by renewable energy.
EVgo is working with GM to triple the size of its network and has begun opening stations.
The Bottom Line on CHPT Stock
Electric cars are coming, but range anxiety is real.
I believe 240-volt chargers, which represent the bulk of ChargePoint’s business, could be obsolete within three years. In addition to building out charging infrastructure, payment infrastructure also must be built out. These stations are also going to need regular maintenance and offer a welcoming environment for quick charging.
Given that, I believe EVgo is ahead of CHPT stock, and Tesla is miles ahead. I think a lot of investment needs to be made for ChargePoint to meet its promises. There’s time to see how this goes before jumping in.
At the time of publication, Dana Blankenhorn directly owned no shares, directly or indirectly, in any company mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at email@example.com, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.