ChargePoint (NYSE:CHPT) rose 10% in pre-market trading July 28. The maker of electric vehicle (EV) chargers was helped by a Senate compromise on climate and energy legislation. At about $14.80 per share, CHPT stock has a market cap of $5 billion on 2021 sales of $241 million.
As the Senate deal was being done, ChargePoint signed an agreement that will see it install hundreds of charging stations at apartment complexes and condominiums across California. The deal brings $4.25 million to install 240 volt chargers designed for fleets or as stand-alone charging stations.
How ChargePoint Stands Against the Competition
Electric car sales are held back by a shortage of fast chargers. Charging equipment companies need a growing car market. Most ChargePoint chargers run at 240 volts and can take all night to recharge a car. They’re designed for use at homes and apartment buildings, like the ones being installed in California.
Tesla (NASDAQ:TSLA) offers faster charging with its 480 volt DC power Superchargers. It also has its own standard for plugs. In 15 minutes, these can get most cars charged enough to go 200 miles.
ChargePoint’s competition with Superchargers is called DC Fast, which supports three different plugs. The top model delivers 350 kilowatts of power and looks like a gasoline station fuel pump.
These “public chargers” are expected to help create a $142 billion market by 2030. While ChargePoint has a big share of the current market, it has fewer 480 volt chargers than Tesla. I call this ChargePoint’s “filling station” problem.
What Happens to CHPT Stock Now
JPMorgan Chase has an overweight rating on ChargePoint with a price target of $18. To justify that price, ChargePoint says it will sign deals to charge entire fleets, especially in Europe. My own view is CHPT stock needs a stronger play in the 480 volt market to be worth your investment. Buyers of fast chargers also need to give something for drivers to do with those idle half hours.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
