As we kick off the week, equities are starting off the day by moving lower, but our shares of EV charging company ChargePoint (CHPT) are falling more to the downside than the overall market. Some of this is due to the relatively high beta associated with the shares, which means it has higher volatility compared to the S&P 500.
Knowing this, as we've seen in recent weeks with CHPT shares and should continue to expect, are wider swings relative to the S&P 500.
The other item hitting all EV charging station stocks this morning, including EVgo (EVGO) , Volta Inc. (VLTA) , and Blink Charging (BLNK) , is a report from DA Davidson that discusses how a number of those companies are undercapitalized.
Inside that report, the firm notes ChargePoint is one that is sufficiently capitalized to reach free cash flow scale due to its far less capital-intensive business model, but also the $541 million in cash it had on its balance sheet exiting its April quarter. As a reminder, "free cash flow" is typically defined as cash flow from operations less capital spending.
Both Bob and Chris discussed CHPT shares in today's Daily Rundown, which should be out shortly and we would encourage members to watch that video as Bob discussed the technical take for CHPT shares.
Tomorrow ChargePoint will hold its annual shareholders meeting, which is likely to be a non-event. While we do not expect any major news coming out of that event, we do expect the company to remain bullish on the opportunities to be had in the coming quarters.
In terms of the shares and what should be done, the AAP portfolio has a full position in CHPT shares, so barring any further and meaningful weakness in the shares we're not inclined to snap them up any further. That said, today's move lower offers members, both new and old, a very favorable risk-to-reward opportunity to build out their position size.
Action Alerts PLUS is Long CHPT.