Chargepoint was a SPAC that I was bullish on since its IPO because millions of gas powered vehicles will be replaced with eco-friendly electric vehicles.
There are really only 2 major layers in the EV charging station market for North America: Chargepoint and Tesla.
Tesla had a major head start and many companies have chosen Tesla’s North American Charging Standard (NACS) as its preferred choice or built their electric cars to be compatible with Tesla’s network.
Due to falling demand for the standard Combined Charging System (CCS) connector, Chargepoint made its charging stations compatible for Tesla adapters.
That’s why CHPT stock has sold off as the company racks up losses (-$299 million net income in 2022) and hasn’t turned a profit since its IPO.
But fear not, the EV charging race is just getting started and Chargepoint stock could soar back to $50 if the company becomes profitable by Q4 2024.
7 Reasons Chargepoint Stock Could Reach $50
1. Chargepoint is one of the most shorted stocks on the NASDAQ
2. Global EV Adoption is Growing Faster Than Expected
Global EV adoption is soaring across the globe as the average cost of EVs drops.
According to InsideEVs, electric vehicles could reach capture 86% global market share by 2023.
Consumers are spending a ton of money at the gas pump due to high gas prices and realize that EVs save money on gas in the long run.
3. Several EV Charging Companies May Go Bankrupt in 2024
The 2021 SPAC boom will force many EV charging companies to go bankrupt next year including high cash burn names such as:
- Blink Charging: -$92 million net income in 2022
- EVgo: -$27 million net income in 2022
- Volta: Faced bankruptcy and was bought by Shell for pennies on the dollar
After the dust settles, Chargepoint should gain market share and survive the SPAC bubble because of its larger market share and strong balance sheet with over $300 million in cash on hand.
4. Lower Interest Rates in 2024 Could Help Chargepoint’s Bottom Line
So many companies are facing higher losses due to rising interest payments on debt.
If Fed Chair Jerome Powell lowers interest rates in 2024 then Chargepoint will save a lot of money on interest payments while experiencing a potential boost in revenue due to higher EV charging demand.
5. Short Sellers Are Fighting Against Climate Change
I truly believe in karma when it comes to investing because what goes around comes around.
Greedy short sellers who attempt to force an eco-friendly company like Chargepoint will pay for it thanks to the “karma effect”.
Companies that fight climate change and make the air healthier to breathe should not be targeted by short sellers yet this is where we are in society.
CHPT longs deserve to gain back all the money that was stolen by greedy short sellers.
6. Chargepoint Could Become Profitable by Q4 2024
Chargepoint CEO Roman Pasale said in Q2 2023 that the company could each positive EBITDA at the end of 2024.
That’s enough time for long term holders to accumulate CHPT shares and trigger a short squeeze when the shorts have to cover their borrow shares.
7. Bagholders WIll Dump CHPT Stock near $50 to Break Even
The CHPT short squeeze will most likely happen around Q3 or Q4 2024 when the company surprises everyone with positive quarterly earnings.
I know a lot of CHPT bagholders are waiting to sell in order to break even around $50. Don’t expect CHPT to soar forever because bagholding is an unfortunate result of the 2021 SPAC boom.
- Stock Dilution: CHPT has done several offering to raise cash as losses pile up. If the company continues diluting shareholders then short sellers will receive new shares to short and keep the stock price down.
- Lost Market Share to Tesla: Tesla is a problem for Chargepoint as more companies adopt its Supercharging network. Tesla raised its prices so perhaps more companies will turn to Chargepoint to save money.
My Gameplan for CHPT Stock
Chargepoint stock was one of my favorites but I had to sell back in 2022 once interest rates continued rising. Now is a great time to jump back in the stock at around $5 since nobody else wants to hold it.
I don’t expect short sellers to cover anytime soon because the future isn’t clear for Chargepoint.
I’m buying CHPT shares for the long term and January 17 2025 calls to make back most of my initial losses.