Is the ChargePoint stock base now?

The future of electric vehicles promises environmental benefits and transition to sustainable energy. However, an important obstacle is on the road: insufficient infrastructure. To support the extensive EV use, a charging station network, a solid grid capacity and an innovative battery technology are needed.

The ownership of the charging point (NYSE: Chpt) is one of the largest EV charging stations in North America and Europe. It aims to enable EVs to be widespread use while benefiting. However, the company has significant obstacles. If you think about buying it, consider the following.

Founded in 2007, ChargePoint has grown into one of the largest charging networks in the world and has a significant presence in the United States and Europe. As stated US News and World ReportChargePoint has more than 38,500 stations and 70,000 charging ports in the United States, so it is the largest EV charging network with a large margin over Tesla.

The company has done a good job to grow its network over the years. However, growth has come to significant costs. It has lost money every year since it was announced in 2021 by merging a special procurement attempt (Spac).

The operating costs have been high, leading to negative free cash flow and net income. It has created confidence in cash funds to maintain a charging point. A consistent cash flow is a concern because it has led the company to utilize the financing market, significantly diluting shareholders.

The company has been in significant headwinds in recent years, which have been wearing business. For one, higher interest rates in 2022, combined with financial uncertainty, caused many of its commercial customers to reduce expenditure. In the midst of this background, the EV adopt has grown slower, which has led many car manufacturers Cut their EV production.

The company also has an increasing competition for Tesla, which offers faster charging ports than ChargePoint, which maintains more older 2 chargers. Tesla has opened charging technology to other car manufacturers, and many of them have collaborated with it to licensing their vehicles. This has left the ChargePoint blend to update its position in Tesla compatible connections.

Then there are federal consumer EV tax credit and other federal expenditure plans that have been introduced during the Biden administration. Tax credit has been an integral part of the introduction of EVs and the charge of infrastructure. The 2022 Inflation Reducing Act expanded in particular to the installation of both residential and commercial EV chargers and continues to encourage consumers.

The story continues

On February 7, the Trump Administration ordered February 7 to stop the $ 5 billion electric vehicle infrastructure program (NEVI), which is part of the 2021 infrastructure investment and jobs law, which will build EV chargers on the highway nationwide. Some legal experts question the administration’s ability to break the program. Nevertheless, it creates more short -term uncertainty for the reservation point.

It has been a difficult trip point journey, which has been steadily declined in the last four years. Despite its position in the charging station market, it has had difficulty in achieving and achieving profitability. As a result, it had to use the stock market and dilute the shareholders several times when the share price decreases.

It also has an uncertain operating environment, and the slower growth of EV and the associated infrastructure and uncertainty about the federal funding of the projects. According to all these factors, the ownership of the payment points is too risky and it is better for investors to avoid this share so far.

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Courtney Carlsen There is no position in any of the mentioned inventories. Motley Fool has places and recommends Tesla. Motley Fool has publication policy.

Is the ChargePoint stock base now? Motley Fool originally published