You don't have to go through the lengthy IPO process if you have a public company willing to take you all the way. ChargePoint Holdings Inc. knows this firsthand.
ChargePoint is an electric charging network company. It completed a reverse merger on March 1 with SPAC (special purpose acquisition company) Switchback Energy Acquisition. Ultimately, the process brought the ticker symbol "CHPT" to life on the NYSE.
How ChargePoint makes money
The reverse merger between ChargePoint and Switchback went through for $480 million in cash, which valued the company at $2.4 billion. ChargePoint makes its money mainly from hardware sales for its charging network. However, the company is working to build recurring revenue through sales and service.
ChargePoint's stock forecast
ChargePoint might be the first publicly traded global EV charging network (according to a press release), but does that mean it's worth the plunge for retail investors? SPACs, particularly those in the EV sector at large, are pretty common nowadays, which we saw with Lordstown Motors Corp. (NASDAQ:RIDE).
Before the ticker transition, Switchback shares saw a more than 300 percent increase in 2020. Since then, the shares have fallen nearly 30 percent despite a 5 percent stock rally from March 5 onward.
ChargePoint is different from its competitors, but how different?
ChargePoint's competitors include:
- Blink Charging Co. (NASDAQ:BLNK)
- EVgo (soon to go public via a SPAC and trade as NYSE:EVGO)
- Electrify America (owned by Volkswagen and trading as OTC:VWAGY)
ChargePoint says that it has the upper hand against competitors because of its cloud-based software, mobile app, networked charging, and on-call support in North America and Europe. Also, with 14 years of business under its belt, the company is much older than a lot of other EV charging brands.
In comparison, Electrify America has the benefit of being owned by a household name. EVgo and Blink have startup enthusiasm, but ChargePoint is in a unique position. The question remains about whether the company's revenue can answer the call.
EVgo versus ChargePoint stock
Pending the deal closing, EVgo will see its own SPAC in 2021. ChargePoint is definitely the pick over EVgo considering the latter company has an ongoing investigation in Pennsylvania. Shareholders of the holding company, CLII, say that the SPAC "breached their fiduciary duty to its shareholders by failing to conduct a fair process, including dilution of ownership interest in the combined company," according to Finder.
How to buy ChargePoint stock
Had my buying list ready to go today.. so I did some nibbling:— Main Street Investor (@RootedonMain) March 4, 2021
Added to existing long positions in $TTWO (first add since June 2020) $AMD (second time adding in as many weeks) and $CRM
Initiated new positions in EV ecosystem plays $CLII $CHPT and semiconductor $TXN.
If you're ready to buy this NYSE stock, you can do so via any brokerage that deals with domestic securities. From Wealthfront to Schwab, you have a lot of options.
Is ChargePoint (CHPT) stock a good buy?
The good news is that CHPT stock is on a dip compared to its highs earlier in the year. This could mean a rebound for ChargePoint shareholders, but it could also mean stubborn stagnancy. Overall, its niche offering might mean slow growth, and I hesitate to be overly optimistic regarding the SPAC pathway. In fact, the risk is in red.
With an 8.61 percent rise from the morning on March 5 to the pre-market hours on March 8, now would be the time to test the cord.