If you think ChargePoint Holdings (NYSE:CHPT) stock will make a quick return to a full charge, think otherwise.
Given the market’s current sentiment for growth stocks, especially growth stocks that went public via a special purpose acquisition company (SPAC) merger, CHPT stock is likely to continue languishing in the near term.
Yet if you’ve been looking to add more EV exposure to your portfolio, this is definitely a name to keep an eye on. Things may have gotten out of hand when ChargePoint made its debut in the public markets, but now the stock has become much more reasonably priced, relative to its long-term potential.
Although it could stay on low charge in the near term, the long term may be a different story. This may make it a great opportunity now and on further weakness.
What Makes CHPT Stock Different
Plenty of former SPAC stocks have justifiably gone from flying high to crash-landing in the stock market junkyard. Scores of early-stage companies that were not ready for prime time have plummeted in price. Market conditions have changed, and current fundamentals, not future potential, have become top of mind among investors.
CHPT stock, however, does not fit in that category. Sure, like other SPACs, this stock has taken a big dive from its all-time high.
At the height of the “SPAC Bubble,” ChargePoint traded for as much as $46.10 per share. Today, the stock changes hands for about 70% below this high-water mark.
However, in contrast to most of the SPAC Pack, this company has done a fantastic job exceeding past promises. As a Barron’s commentator pointed out on Sept. 30, ChargePoint’s estimated sales for 2022 and 2023 ($482 million and $732 million, respectively), are well above the forecast provided in its initial SPAC presentation ($346 million and $602 million, respectively)
Favorable EV adoption and energy policy trends have played a major role in this outperformance. Favorable trends stand to continue for ChargePoint, which are likely to keep it in high-growth mode.
A Re-Raising of the Tide Could Really Lift its Boat
The market isn’t ignorant of the numerous tailwinds with this company. As I talked about in my last article on CHPT stock, these tailwinds include the buildout of America’s EV infrastructure financed by the Inflation Reduction Act, and this company’s launch of a new charging product designed specifically for the European market.
Despite these factors pointing to ChargePoint continuing to beat expectations, the issues that have driven stocks into a bear market (inflation and rising interest rates) continue to play out.
These negatives, coupled with rising recession concerns, are outweighing ChargePoint’s many company-related positives. However, although these factors could continue to hurt this stock’s short-term performance, it’s not as if these issues will keep shares in a permanently-depressed state.
Ultimately, today’s macro uncertainties will resolve, as they’ve done in past market cycles. The bull market will return, and growth stocks will again come back in vogue. A re-raising of the tide could lift all boats, but names like CHPT will likely receive a greater lift, thanks to its stronger prospects relative to other growth stocks.
Bottom Line on CHPT Stock
I wouldn’t say there’s great urgency in adding ChargePoint to your portfolio as it’s likely to continue delivering middling returns in the near term. Since market conditions will improve only gradually, you may want to take your time building a position or wait for an even more opportune entry point.
I would also recommend making this a small, speculative position if you choose to buy.
Secular trends, such as the push for EV proliferation are likely to keep it in high-growth mode, whether or not a recession happens. When growth stocks come back into favor, CHPT stock could bounce back in a big way.
CHPT stock earns a B rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.