ChargePoint Holdings (CHPT) is a California-based company that provides EV-charging infrastructure. I am cautiously bullish on CHPT stock.
There are a number of reasons why ChargePoint is a hot topic among investors. For one, the U.S. Senate passed a $1 trillion bipartisan infrastructure bill on August 11.
This bill contains financial provisions for EV charging stations. The next step will be for the House of Representatives to debate the infrastructure bill.
Also, ChargePoint plans to release its second-quarter earnings on September 1. It’s an exciting time to consider a position in CHPT stock, and the perfect time to weigh the pros and cons of taking a long position now. (See CHPT stock charts on TipRanks)
A Quick Look at CHPT Stock
On a long-term basis, ChargePoint’s investors have done quite well. After all, CHPT stock has doubled in price over the past year.
The momentum has been somewhat less bullish over the past six months, however. The share price is down from its 52-week high of nearly $50, reached back in December of 2020.
That’s not necessarily a bad thing, though. Technical traders should appreciate that CHPT is close to a support level of around $20.
On three separate occasions — in March, April, and May of 2021 — CHPT stock came down to the $20 area before rising. This could certainly happen again in the near future, especially with an earnings report coming up.
To be fair, however, a less positive data point should be reported. Specifically, ChargePoint has a trailing 12-month loss per share of $6.47; not great when the stock is trading only slightly above $20.
Expanding into Europe
Some folks might choose to buy CHPT stock because it’s near a support level, or because of the possible future passage of the infrastructure bill.
However, there’s another reason as well: ChargePoint is expanding its operations through value-added acquisitions.
One of these acquisitions will help ChargePoint expand its operations into Europe. In particular, the company announced on August 11 that it has acquired ViriCiti for $87.9 million.
ViriCiti provides electrification solutions for e-bus and commercial fleets.
Clearly, ChargePoint is serious about expanding into Europe. ViriCiti is based in Amsterdam, and it is ChargePoint’s second acquisition in the European market (the first one was an operating software firm called has.to.be.).
Growing Addressable Market
With or without the financial support of the U.S. Congress, it’s probably inevitable that ChargePoint’s addressable market will grow in the coming years.
A report by Meticulous Research provides a highly optimistic outlook for the global EV charging station market. In fact, that market is projected to increase in value to $103.6 billion by the year 2028.
From the forecast period of 2021 to 2028, this growth pace implies a CAGR of 26.4%.
It’s truly amazing to consider how quickly this addressable market is expanding. In 2019, the total number of EV charging stations in the world was 2.1 million. By 2030, the U.S., China, and the European Union are predicted to have a cumulative total of 120 million EVs on the roads.
The number of charging ports will have to increase, and ChargePoint will have been an early adopter of this important technology.
Wall Street Weighs In
According to TipRanks’ analyst rating consensus, CHPT is a Strong Buy, based on seven Buy ratings and one Hold rating. The average ChargePoint price target is $35.75, implying 62.7% upside potential.
Takeaways
There are a number of potential headwinds for CHPT stock. Among them is the upcoming earnings report, which could lift the share price.
The infrastructure bill could also provide support to ChargePoint.
Aside from those points, the company’s addressable market is likely to grow quickly, even without the government’s near-term financial support.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
