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ChargePoint Holdings Stock Has a ‘Filling Station’ Problem


For ChargePoint Holdings (NYSE:CHPT), and indeed for all the companies involved in electric car charging, a key question remains unanswered. What will an electric “gas” station look like? Will you still be able to “trust your car to the man who wears the star?”

A close-up of an orange ChargePoint (CHPT) station.
Source: JL IMAGES / Shutterstock.com

We know how gasoline engines fill up. It takes just a few minutes. You can find stations everywhere. The imagination of station owners like Wawa and Buc-ee’s is bent to extending that time, pulling-in after a fill-up and going into the store.

Electric cars take a half hour to fully charge, even with something like ChargePoint’s 480-volt “DC Fast.” With a 240-volt charger, the kind of power your clothes dryer might use, it still takes overnight. All you’re doing with household current is a top-up.

Thus, “range anxiety,” the fear that your electric can’t go onto the open road. It may be the biggest hurdle to a mass market in electrics.

The optimal answer for the electric car market is a station like Buc-ee’s, or a high-end truck stop like Pilot Flying J, a chain partly owned by Berkshire Hathaway (NYSE:BRK.A). You need a place where you’ll spend a half-hour. Such a store would also need to alert drivers when their cars are ready, so the plugs can get optimal use.

Fill ‘Er Up

Even Tesla (NASDAQ:TSLA) hasn’t quite figured it out. Most Tesla plugs are “Destination Chargers,” those 240-volt units suitable for a top-up, often placed near hotels. “Supercharger” stations are usually placed at shopping malls. It’s still sub-optimal.

I’ve been harping on this in my writing about ChargePoint.  Until an electric charger becomes like a gas pump, you’re not going to get mass adoption.

ChargePoint is boosting “charging as a service” at hotel chains. It’s branding its network around car brands like Mercedes-Benz.

But ChargePoint doesn’t run electric charging stations. It sells hardware and offers software from a cloud-based platform. Its July 20 acquisition of has.to.be, a European charging software company, demonstrates this. Most ChargePoint sales are to commercial fleets and new car owners. A fleet owner can recharge overnight, or between shifts. So can a homeowner. But they’re not going far from their charger. They’re tethered.

Analysts Still Pounding Table

ChargePoint had just $40 million in revenue during the quarter ending in April. Operating cash flow for the period was a negative $2.1 billion.  Small wonder that since the start of 2021 the stock is down 35%. Yet it still has a market cap of $8.35 billion.

Analysts continue pounding the table for ChargePoint stock. It’s too soon to write off, they say. Revenues should grow at nearly 50% per year for the foreseeable future. You’re in on the ground floor.  All five analysts following CHPT as tracked by TipRanks still rate it a buy. Their price target is 55% above where it traded July 20.

As our Josh Enomoto notes, the argument for charging continues to be based on the plans of car companies to go electric. The chicken-and-egg problem of range anxiety could keep any of this from happening.

The Bottom Line

Standard Oil made gasoline the dominant fuel for cars in the early 1900s by subsidizing it. Gasoline was practically worthless in 1911. Oil companies made their money on other fractions, like kerosene and paraffin. By creating networks of “filling stations,” oil companies eliminated range anxiety.

That’s what the electric car industry needs now. It needs a filling station business model that works with today’s hardware. The charging company that creates one will build a huge business for itself, and for other charging companies. Selling such a model to an existing gas station chain, like Buc-ee’s, would also do the trick.

Our Louis Navellier still likes ChargePoint because it’s the biggest company in its field. But until it can find its way to the tip of the spear, and solve the business problem created by range anxiety, it’s still a speculation.

On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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 danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

Article printed from InvestorPlace Media, https://investorplace.com/2021/07/chargepoint-holdings-stock-has-a-filling-station-problem/.

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