It seems like an eon ago given all that we’ve experienced over the trailing year. However, the Texas winter storm that occurred in February of this year is really only a few months removed from our present. Yet the impact of that crisis within a crisis may have been the turning point for ChargePoint (NYSE:CHPT) stock.
Since that cold snap, the electric vehicle infrastructure firm’s stock has never been the same.
To be fair, there was a sizable rally that took place between roughly the middle of May to the end of June, which saw shares jump nearly 77%. But aside from that month-and-a-half period, CHPT stock failed to capture the imagination like it did back in November and December of last year. It begs the question, why?
On the surface, it’s easy to see why someone would get a bout of buyer’s remorse so to speak about EVs amid the once-in-a-blue-moon storm. As partisan pundits took the opportunity to politicize the disaster, mainstream cable news streams were replete with images of frozen wind turbines and rendered-useless solar panels.
Though these images didn’t have a direct connection to EVs, the underlying message was that the electrification of the road won’t necessarily lead to true energy independence. In that respect, perhaps the drop in CHPT stock wasn’t too unexpected.
On the other hand, the cold snap represented a temporary headwind. As people gradually recovered from the natural disaster along with the broader novel coronavirus pandemic, normal activities will resume. With that would come consumers eager to make up for lost experiences last year with wide-open wallets.
You couldn’t ask for a better backdrop for CHPT stock. Yet shares outside of the May-June rally have printed disappointing performances. As well, the equity unit is down 9% over the trailing month since Sep. 1.
Reality Is Starting to Kick in for CHPT Stock
Thanks to the logical backdrop bolstering EVs, it’s difficult to argue against the notion that the future of mobility is electric. With Tesla (NASDAQ:TSLA) proving the platform’s viability, legacy automakers and direct competitors have joined the fray. If that wasn’t enough, you have various governmental initiatives designed to force the issue by banning fossil-fuel-burning cars.
From that perspective, it’s like shooting fish in a barrel. Of course, CHPT stock is a no-brainer. So why are investors thinking so hard about it?
While there are many factors involved, one consumer-related headwind is that the cold snap may have induced a wake-up call for potential EV buyers. You see, EVs truly outperform combustion-based cars when society is running normally and when acts of God are not thundering down from above.
During the day, EVs can connect to infrastructure that’s tied to renewable energy sources. During the night, those same vehicles can charge up through the grid, well past peak demand. But during a crisis situation, every day, every hour, every minute represents a peak unit of time. Under this context, combustion cars are more “efficient.”
You can’t argue the point because it’s science. As the Brookings Institution explained, fossil fuels are so hard for societies to quit because of their incredible energy density, especially compared to EV power units. In a pinch, you can take a gallon jug of gasoline to your stranded car and drive around 30 miles. That’s a good-sized distance.
The equivalent jug of electrons? You’re not getting very far.
Beyond the February cold snap, consumers are also looking at the raging firestorms that have afflicted many parts of the U.S. last year and this year. Again, when it’s go time, you’re honestly better off with a combustion-based car, which doesn’t help CHPT stock.
Don’t Ignore ‘Combustible’ Technologies
Another issue that could be clouding CHPT stock is that forecasts calling for robustly conspicuous integration of EVs may have been off the mark. Aside from the cost issue of the electric platform, there’s also the matter that combustion cars know how to flex their technological muscle too.
As I would know from personal experience, modern cars with turbocharged four-cylinder engines sip fuel when cruising, only coming alive when called upon. Otherwise, it’s not at all unusual for fairly large SUVs to get 28 to 30 miles to the gallon.
Just that alone may be enough to convince consumers to hold off on the EV transition. But every year that the masses abstain from electrification makes the case for CHPT stock increasingly less palatable.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.