Ev Charging Station Stocks – ChargePoint (NYSE: CHPT ) is my favorite EV charging station stock because it is the #1 pure play on the inevitable EV boom that will replace ICE vehicles with environmentally friendly electric vehicles.
However, things haven’t been smooth sailing for Chargepoint lately. Prior to Chargepoint’s merger with Switchback Energy, the SPAC’s stock traded as high as $49 before falling to $19 per share after the merger.
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Many critics believe that ChargePoint is too high or too expensive to buy at current price levels. I am a big believer in buying assets when they are not popular. When Chargepoint stock hit recent lows, I began building my position with the goal of holding the stock through the decade.
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If you’re looking for potential EV charging companies to invest in, I think ChargePoint is worth a look. In this article, I’ll explain why I believe Chargepoint is a reasonable buy at current price levels despite all the bearish chatter.
ChargePoint is one of the world’s leading electric vehicle charging companies and was founded in 2007. The company generates revenue by offering electric vehicle charging solutions in the United States and Europe. CHPT uses everything from Level 2 to DC fast charging to power all types of EV vehicles, including cars, buses and delivery vans.
We will use these numbers for valuation purposes when the company reports its first earnings as a publicly traded company for Q4 2021.
Revenues for fiscal year 2020 were $146.5 million (from $144.5 million in 2019) even though the global pandemic reduced car usage by 80%.
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As you can see from the graph above, the revenue of the charging points is directly related to the number of EV vehicles on the road. The company somehow managed to increase revenues during one of the worst health crises in the last 100 years.
Many reports suggest that 2021 will be a big leap year for the US economy, and EV companies like Tesla ( TSLA ) have reportedly sold off their EV production months in advance.
All these signs point to a big step forward for the entire EV industry even though we are still in the early innings of the EV boom.
First, I think many investors underestimate the scope of the EV movement. Millions of EVs will be sold in the next few years as more EV companies launch 21st century vehicles and consumers switch from gas guzzlers.
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At the same time, many investors are trying to choose between EV manufacturers like Tesla, Fisker (FSR), Lucid Motors (CCIV), or even OEMs like Ford (F). All of these companies compete directly with each other for market share and will put millions of EVs on the road in the future.
During the California Gold Rush, many gold prospectors traveled west in search of gold and lost all their savings on wild goose chases. However, those who sold only picks and shovels became millionaires.
Chargepoint is extremely well positioned to generate strong revenue and positive earnings regardless of which EV becomes America’s favorite. The fact that Chargepoint has a small market share in Europe is just the icing on the cake.
CHPT stock currently trades at a price-to-sales ratio of 44, but I think earnings will increase as the EV boom continues. There is a bit of risk at this price, but the upside is too good to ignore in my opinion.
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Chargepoint did a great job of going public in early 2021 despite a few setbacks. However, there are several risk factors that could hurt the stock in the short term.
Competition for the EV charging market is fierce at the moment. There are several companies planning SPAC mergers like Chargepoint later this year. Volta Charging (SNPR) and EVgo (CLII) are two EV charging companies with excellent business models and could impact the entire EV industry once the merger is completed.
Additionally, Blink Charging (BLNK) continues to grow its user base and provide EV drivers with a legitimate charging point alternative. There are also private EV charging companies like Electrify America that could steal more market share. If ChargePoint can’t provide an incredible charging experience, consumers have many alternatives available.
Another risk factor is that ChargePoint’s predominantly 240-volt Level 2 charging network could lose market share to faster charging options such as EVgo’s DC fast charging network. Level 2 charging is best for charging your vehicle overnight, while DC fast charging may be more popular for users who want a quick charge.
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If consumers prefer companies that provide high-speed DC charging ports like EVgo, then ChargePoint will need to replace many of its charging ports or risk losing market share.
Finally, EV adoption may not grow as fast as expected. Switching from ICE to EV doesn’t come without its growing pains. In fact, many EV buyers have turned to ICE vehicles because of the charging inconvenience. If more consumers resist switching to electric vehicles, ChargePoint may not grow fast enough to justify its high price.
Buy when there’s blood in the streets. The global semiconductor chip shortage has affected the EV market, but it won’t last forever. Once production ramps up, ChargePoint will benefit from the explosion of EVs on the road.
The company projects $200 million in revenue for fiscal 2021, and I think that’s just the beginning. Shares of charging points could increase 10 to 20 times over the decade, as long as the EV boom continues and more people make the switch.
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Analyst Disclosure: I am/we are long CHPT. This article is written by myself, and expresses my opinion. I’m not getting paid for this (besides looking for alpha). I have no business relationship with any of the companies whose stock is mentioned in this article.
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If you have an activated adblocker, you may be prevented from proceeding. Please disable your ad blocker and refresh. ChargePoint (NYSE: CHPT ) is my favorite overall EV charging station stock to buy right now, but that doesn’t mean it’s all smooth sailing. CHPT shares have had a few months after a massive rally in prices in January.
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When it comes to investing, just try to “be greedy when others are afraid and fear when others are stingy.” Now, Chargepoint is facing several uncertain issues that have caused bears and short sellers to tank the stock.
Is Chargepoint a solid buying opportunity for long-term gains? I will discuss why I believe so even if things look bleak in the short term.
Even though meme stocks and cryptocurrencies are hot right now, I’m still a fundamental value investor. I look for companies with growing revenue and market share in fast-growing industries.
ChargePoint checks both boxes despite facing a few short-term headwinds (I’ll get to those in a moment).
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In Q2 2021, ChargePoint reported $56.1 million in revenue (up 61% year over year) and raised its revenue guidance for the rest of the year. Gross margin decreased to 19.2 percent and the company recorded a net loss of $84.9 million.
EV investors got impatient and started dumping the stock like crazy. Short sellers helped push the stock below the key $20 level.
From a fundamental perspective, Chargepoint has rebounded quite well from the pandemic slowdown. Revenues increased with EV production and the company made 2 major acquisitions in Europe.
Chargepoint acquires 2 companies to increase its market share in Europe and grow revenues outside of North America. The companies are:
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According to ChargePoint’s press release, ViriCiti and Has-To-Be will help drive higher revenue and return value to shareholders:
With the joint acquisition of Hastobe and ViriCiti, ChargePoint now has the most comprehensive set of electric fleet solutions in Europe and North America. From concept to scale, ChargePoint’s portfolio of fleet solutions includes everything fleets need to electrify and optimize fuel as they grow. A fleet management solution, AC and DC fast charging solutions, together with the telematics capabilities brought by ViriCiti, balance charging costs with operational readiness for fleets of all sizes, making ChargePoint efficient of any fleet and is a contributor key to rapid electrification.
ChargePoint ended Q2 2022 with only 5,400 charging ports in Europe, so these two acquisitions will push that number to over 40,000 ports, giving ChargePoint around 160,000 total charging ports worldwide.
Legendary companies like Amazon (AMZN) and Apple (AAPL) have used acquisitions to grow rapidly
New Red Ev Car And Electric Car Charging Station For Charge Electric Vehicle. Ev Charger. Commercial Electric Car Charger. Ev Car Dealer Concept. Charging Point. Sustainable Transport. Green Energy. 7353611 Stock Photo
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