Here’s Why ChargePoint Doesn’t Have a Clear Road Ahead

CHPT stock - Here’s Why ChargePoint Doesn’t Have a Clear Road Ahead

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Easily becoming one of the most vexing investments in the market, ChargePoint (NYSE:CHPT) treads water with a mixture of both supportive and stymieing conditions. Obviously, the geopolitical flashpoint in eastern Europe presents a critical incentive for world leaders to rethink their countries’ dependencies on hydrocarbons. On the other hand, implementing such an overhaul will take time and considerable upfront costs, presenting concerns for CHPT stock.

To the latter point, ChargePoint disclosed a key financial development which will undoubtedly intrigue investors in clean energy solutions. Private investment firm Antara Capital agreed to make a $300 million investment in CHPT “through the purchase of convertible senior notes to support ChargePoint’s growth initiatives.”

Building infrastructure for electric vehicles (EV) poses a classic chicken-and-egg problem, where growth in one segment depending on growth in the other. Therefore, this injection may prove to be pivotal.

Further, recent news from FleetEurope suggests that the EV sector may provide a bright spot in a gloomy environment for automobile sales. While fleet car sales in the U.K. were down 34.4% in March on a year-over-year basis, battery EVs were up nearly 79% YOY. This dynamic should provide a clear catalyst for CHPT stock, right?

Well, investors won’t want to jump straight into the EV segment before noting how expensive this category of personal transportation has become. Consumer Reports noted the average new-car price topped $47,000 recently, an all-time high. However, new EVs (in the U.S. market) have averaged slightly over $60,000.

Considering the median household income was $67,521 in 2020, buying a $60,000 EV is just not sustainable for most Americans. Since a business like ChargePoint depends on high volume instead of an elite customer base, economic viability of the underlying EV industry matters. Therefore, prospective investors of CHPT stock will need to carefully assess the pros and cons before proceeding.

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.


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