It’s clear that an investment in ChargePoint (NYSE:CHPT) stock remains a speculative bet on long-term catalysts. Any investment predicated on multiple long-term catalysts accordingly has multiple junctures at which it can fail.
That’s as true for ChargePoint as it was for Tesla (NASDAQ:TSLA). It’s easy to condemn these kinds of companies before they prove anything. Tesla is a unicorn in many senses, but the example is apt. If ChargePoint fulfills its promise it could become a similar success story.
ChargePoint could get it all right. In that case its EV charging stations could become as ubiquitous as Shell (NYSE:RDS.A) and Hess’ (NYSE:HES) fossil fuel equivalents.
Of course, it could falter as well. But let’s take a positive view on ChargePoint’s future prospects and look at three reasons to invest now.
CHPT Relatively Cheap
If the old maxim of ‘buy low and sell high’ holds true, then now may very well be an excellent time to purchase CHPT stock.
ChargePoint share prices are just about as low as they’ve been all year. Current share pieces are near $23, after following a U-shaped trajectory this year. Shares started 2021 above $44 and then sloped downward hitting multiple $20 bottoms in March, April, and May. Then that U-shaped curve pitched upward as CHPT stock hit $34 in late June.
So, at $23, there’s an established pattern which indicates ChargePoint prices are unlikely to go much lower.
That pattern is somewhat reassuring. Further, Wall Street’s dedicated analysts who make a living studying EV market dynamics also like ChargePoint’s prospects.
They currently rate CHPT shares as a ‘buy’ overall. Of the eight analysts with coverage of ChargePoint, the sole dissenting opinion is a hold rating. The average target stock price is $36, with a high ranging to $46. Shares have proven to be volatile throughout 2021, but those target prices should lend a degree of confidence nonetheless.
Latest Earnings Showcased Strengths
ChargePoint last released earnings in early June and won’t do so again until Sept. 2. What investors saw from the company two months ago was, however, encouraging.
In the first quarter of this year the company showed improvement in several of the most important metrics for any company, private or public.
Namely, there were multiple revenue metrics which should serve to somewhat appease the most skeptical of investors.
In the first quarter, overall revenues increased 23.6% to hit $40.51 million. And revenues from networked charging systems were even stronger, growing at a rate of 36.34% on a Q1 year-over-year basis.
That said, there is a bit of a dull spot in the company’s revenue figures. That dull spot was subscription revenue growth. It was a relative laggard, growing only 20.21% YoY.
As a growth company ChargePoint has multiple operational weaknesses to address. That remains very true. But the top line is arguably the most important one for growth companies. It was strong. That should at least assuage concerns around larger issues like EV acceptance and future prospects.
Congressional Boost?
The $1 trillion infrastructure bill is working its way through Congress. It is being hailed as a bipartisan effort to revitalize America’s infrastructure, bringing jobs with it.
It appears that resolution to the debate will take some time. Democrats are eager to push the 2,700 page bill into law but Republicans caution that amendments may need to be considered.
If the bill passes, ChargePoint share prices should receive a significant boost. As Electrek reports, the bill includes: “$7.5 billion for electric vehicle charging stations, with a focus on highways and routes that connect rural and disadvantaged communities. The good news? It’s the first-ever US investment in EV chargers. The bad news is it’s only half of what President Joe Biden wanted in order to build a national network of 500,000 charging stations.”
Even if the bill results in less than President Biden hoped for, it is good for ChargePoint. It signals a bright future for the company.
Takeaway
There are multiple reasons to be cautiously optimistic regarding CHPT stock right now. Few would recommend charging headlong into a massive position in CHPT, but a small investment makes a lot of sense.
On the date of publication, Alex Sirois 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.
