On the Apr. 19 session, ChargePoint (NYSE:CHPT) jumped significantly against the prior day’s closing price, swinging up 7.3%. Some of the enthusiasm could be tied to unusual options activity, particularly $16 strike-price calls expiring on Apr. 29, 2022. Open interest here is only 175 contracts, yet the volume on the day was 26,889 contracts, a nearly 154X magnitude difference. This aggressive bet for CHPT stock, in theory, is positive for the electric vehicle (EV) charging station provider.
Adding to the bullish framework, ChargePoint features many upside catalysts. Environmentally, there are several scientific organizations pounding the table on the need to reverse the damage of climate change. Politically, policymakers are under pressure to promote a pivot to clean and renewable energy, which has natural implications for CHPT stock.
Then, the cynical firecracker: Russia’s unsettling decision to invade Ukraine has many European leaders scrambling for an alternative to Russian hydrocarbons. Clearly, one of the best mitigatory actions is to reduce the pressing need for fossil fuels. Therefore, a broader rethink toward clean energy is theoretically a downwind benefit to CHPT stock.
Despite the positives, ChargePoint isn’t doing so well in the charts. Over the trailing year, CHPT stock is down 26%. In 2022, it has dropped nearly 16%. That is despite CHPT swinging up 32% since the eve of Russia’s invasion. Therefore, it is not terribly surprising that bearish activity is also picking up. On the Apr. 18 session, CHPT stock experienced unusual options activity for $14 strike-price puts with an expiration of Jun. 17, 2022.
Fundamentally, the narrative for the EV network rollout isn’t so clear-cut. For instance, while Europe is certainly interested in transitioning to clean and renewable energy solutions, it is going to take some time. Therefore, the attention is on replacing hydrocarbon supply chains from Russia to another, more reasonable nation.
That is not to say that CHPT stock isn’t without its intriguing arguments, as mentioned earlier. But it is also not devoid of challenges that management must address.
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.
