Insights

Why Shares of ChargePoint Holdings Climbed 7% in June

What happened

Reversing course from their 1.2% drop in May, shares of ChargePoint Holdings (NYSE: CHPT) powered 7% higher last month, according to data from S&P Global Market Intelligence.

The June performance of ChargePoint, a leading EV infrastructure business, especially warrants recognition when compared with the S&P 500‘s 8.4% decline. While several analysts had panned the stock early in June, a bull’s positive take on ChargePoint charged up investors’ enthusiasm in the middle of the month. 

So what

Disappointed with ChargePoint’s Q1 2023 earnings on May 31, several analysts shared pessimistic outlooks on the EV charging stock, motivating investors to exit their positions. On June 1, for example, analysts from Citigroup, Piper Sandler, and Evercore ISI all reduced their price targets.

About two weeks later, though, B. Riley revealed a positive perspective on ChargePoint — and investors reveled. On June 17, Christopher Souther initiated coverage on the stock, assigning a buy rating and a $20 price target. In response, investors enthusiastically clicked the buy button, which led shares to close nearly 12% higher than where they had ended on the prior day.

Image source: Getty Images.

While investors were exuberant after learning of B. Riley’s auspicious view, another analyst, this one from Stifel, revealed a price cut shortly thereafter, which led to the stock tumbling again. On June 22, Stephen Gengaro slashed the price target on ChargePoint to $26 from $32 while maintaining a buy rating on the stock. According to Thefly.com, Gengaro didn’t restrict his price target reduction to ChargePoint, rather he lowered price targets for several EV charging stocks that he covers in response to the uptick in interest rates.

Now what

With drivers paying more at the pump, interest in EVs is accelerating rapidly. Investors, consequently, are looking for ways to benefit. While EV manufacturers are the obvious consideration, EV charging infrastructure companies like ChargePoint are also drawing attention.

The EV industry is in its infancy, though, and while the growth prospects of related stocks remain high, it’s imperative for prospective investors in the space to recognize that volatility is also to be expected. Moreover, it’s important to bear in mind that while it’s helpful to follow analysts’ outlooks on the stocks they cover, their investing horizons are oftentimes shorter than the multi-year holdings we prefer; therefore, it’s best to take their price targets with a grain of salt.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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