ChargePoint (CHPT) operates electric vehicle (EV) charging stations. I am bullish on the stock.
The vehicle electrification movement is charged up – no doubt about that. Many traders choose CHPT stock as their go-to investment vehicle for exposure to the EV charging market.
However, as the ChargePoint share price has rallied to over $20, some traders might wonder whether the stock is starting to run out of power.
There’s no need to worry, though. A collaboration with an unexpected partner could electrify CHPT stock, as well as the EV charging market as a whole, in 2022.
An Unlikely Partnership
Did you ever imagine that a banking giant like Goldman Sachs (GS) would dive head-first into the EV charging market? Believe it or not, this is actually happening right now.
No, Goldman Sachs isn’t going to start making EV charging stations. What the company is doing, however, is teaming up with ChargePoint to introduce new, tailored financing solutions.
It’s a win-win scenario, as the collaboration could reduce the up-front costs associated with EV charging technology for eligible customers. In other words, these expenditures don’t need to be a deterrent anymore for businesses seeking to deploy EV chargers.
Moreover, ChargePoint and Goldman Sachs Renewable Power will be offering financed and turnkey options to clients. These options include end-to-end construction, installation, and maintenance.
Reducing the Barrier
So now, reluctant businesses can more easily and affordably get involved in the EV revolution.
As ChargePoint President and CEO Pasquale Romano explained, “This partnership with Goldman Sachs Renewable Power reduces the barrier to entry for businesses who have been interested in adopting clean energy but have held back due to lack of tailored financing.”
With ChargePoint and Goldman Sachs Renewable Power eliminating the up-front costs associated with EV charging, these potential clients have no excuses left. Fleet owners, in particular, can take advantage of this opportunity to cut costs.
Jon Yoder, head of the Renewable Power Group of Goldman Sachs Asset Management, emphasized that the partnership will provide “an easier, better way for fleet operators to prepare for conversion of their fleets to electric and for businesses to serve their customers and employees, who increasingly will arrive in EVs.”
All of this leads to a bigger question: Will more big banks jump into the EV charging station market? They probably will, but they’ll surely want to partner with other businesses. Of course, large financial institutions aren’t likely to start producing the charging ports on their own.
There’s no need for big banks to reinvent the wheel, so to speak, by developing their own manufacturing processes to make EV charging stations. Instead, they can just partner up with a premier charging port manufacturer.
If any company fits that bill, it would definitely be ChargePoint. The company already has an extensive network of EV chargers throughout the U.S. Plus, ChargePoint has the name recognition that a small start-up company in the sector might not have.
Hence, ChargePoint is the most obvious choice if more financial giants want to enter the fray. Investors should keep an eye out for more deals and partnerships between ChargePoint and powerful banks with deep capital reserves at their disposal.
Big-Time Financing
As CHPT stock lingers near $20, some skeptics will still wonder whether ChargePoint is sufficiently capitalized to pursue the company’s ambitious vision of growing its charging station network throughout the nation and the world.
That’s a fair point to raise, but ChargePoint’s investors can breathe a sigh of relief if they’re worried about the company being under-capitalized. As it turns out, ChargePoint will receive a capital infusion to the tune of hundreds of millions of dollars.
To be more specific, ChargePoint revealed that Antara Capital LP has agreed to make a $300 million investment in the company. This will reportedly take place through the purchase of convertible senior notes and will have the objective of supporting ChargePoint’s growth initiatives.
It won’t be long now, as this mega-dollar transaction is anticipated to close on April 12, 2022. In exchange for $300 million, Antara Capital LP will receive Convertible Senior Notes due 2027, with rates of 3.5% / 5%.
In other words, ChargePoint will have to pay interest on this debt of 3.5% and/or 5% per year. Still, just consider what ChargePoint can do with $300 million. “Supporting ChargePoint’s growth initiative” can mean many different things, from research and development to marketing and selling and much more.
Wall Street’s Take
Turning to Wall Street, ChargePoint has a Moderate Buy consensus rating, based on eight Buys and four Holds assigned in the past three months. The average Chargepoint price target is $24.50, implying 23% upside potential.
The Takeaway
ChargePoint is working with one of the world’s most famous financial institutions to help reduce barriers to EV adoption.
It’s a powerful partnership, and CHPT stock traders should take notice. Betting against ChargePoint now would be unwise, as the share price could maintain its upside momentum.
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