To recap, the shares have been hit by what we see as two factors -- the tight correlation to Tesla (TSLA) shares, which can be seen in the chart below, and the pressure on small-cap shares since the string of bank failures in March.
For context, while the S&P 500 and Nasdaq Composite added 3.5% and 6.7%, respectively, in March, the small-cap heavy Russell 2000 shed 5.0%. That explains the differentiated movement between Tesla and ChargePoint shares of late, but that historical correlation is still hitting CHPT shares as investors fret over margins at Tesla after six prices cuts so far in 2023.
However, as we discussed on this week's AAP Podcast with Orion Energy Systems (OESX) , the flows of federal funds for EV charging stations is just beginning and is poised to ramp in the coming quarters making 2024 the tipping point.
At the same time, private funds continue to flow as companies look to address customer demands as well as their own fleet needs, driven in part by carbon emission targets. That combination points to growing activity as we move through this year with further gains in 2024 and 2025.
It's that long-term opportunity that is our focus with ChargePoint shares. Comments made by Orion about its relationship with ChargePoint reaffirm our decision to bet on this EV charging station horse.
We'd remind you that exiting the company's January quarter, its balance sheet had ~$369 million in cash and equivalents, which puts it in a very different position than some other EV charging companies. In our view, this reduces any near to medium term funding risk, and makes some of the more recent pressure on the shares rather over done in our view. That is leading us to scoop up another slug of CHPT shares, at what we see as a very favorable long-term risk to reward trade-off.
After you receive this Alert, we will buy 1,530 shares of ChargePoint at or near $9. Following the trade, the portfolio will own 13,735 CHPT shares, roughly 3.5% of the portfolio.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)