If youâ€™re interested in electric vehicles (EVs), thereâ€™s a good chance that youâ€™ve been following the progress of Switchback EnergyÂ (NYSE:SBE). This is a special purpose acquisition company (SPAC) designed to take ChargePoint public. Therefore, owning SBE stock means that youâ€™d be wagering on ChargePoint.
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As for ChargePoint, this company is known as a major developer of electric vehicle infrastructure. More specifically, ChargePoint (as the name implies) provides electric vehicle charging stations.
This could be viewed as a â€œpicks and shovelsâ€ type of investment in the electric vehicles sector. Instead of betting on a particular electric car manufacturer, SBE stock represents a niche product that could potentially be used by all of these vehicle makes and models.
Thus, as Switchback Energy moves closer to finalizing its merger with ChargePoint, prospective investors should consider the value proposition of this charging station supplier, and of the sector as a whole.
SBE Stock at a Glance
With SBE stock, we can discern a common pattern with SPAC stocks in 2020.
Earlier in the year, investors didnâ€™t know which direction Switchback Energy would go as a SPAC. As a result, SBE stock was stuck near the $10 level for many consecutive months. Few people in the financial press were talking about SBE. Yet, the share price wasnâ€™t destined to cling to $10 forever.
September was a banner month for SBE stock bulls, as the share price quickly popped to $15 for a nice 50% gain. After that, the stock went sideways for a month, but really it was just basing for another big move.
In the second half of November and the first couple of weeks of December, SBE stock powered much higher. It is now comfortably above $35.
Clearly, the market is enthusiastic about ChargePoint. However, itâ€™s important to examine the company closely before taking a position.
A Category Creator
When ChargePoint announced its merger with Switchback Energy, the electric vehicle market certainly sat up and paid attention. ChargePoint also took the opportunity to promote itself as a â€œcategory creator in EV charging.â€
Thatâ€™s a big claim, but itâ€™s actually quite accurate. Remember, ChargePoint was founded all the way back in 2007, before the stock market was hyped up about electric vehicle stocks.
Along with being an early mover in the electric vehicle charging space, ChargePoint has some stats to back up its â€œcategory creatorâ€ claim:
- Customer count exceeding 4,000 businesses and groups
- Network of more than 115,000 charging locations
- Largest network of charging stations in Europe and North America
- 133,000 other â€œpublic places to charge through network roaming integrations across North America and Europeâ€
- About every two seconds, someone is plugging into the ChargePoint network
- When that document was released, drivers had done â€œmore than 82 million charging sessionsâ€
Big Growth Projections
As you can see, ChargePoint has an expansive charging network and a sizable customer base. Perhaps it shouldnâ€™t be too surprising, then, that Switchback Energyâ€™s business combination with ChargePoint set the latter company at an implied $2.4 billion enterprise value.
If all goes as planned, ChargePoint could have approximately $683 million in the bank upon the closing of the transaction. That should substantially bolster ChargePointâ€™s fiscal position.
How much can ChargePoint scale up from here? The company projects an astonishing 60% compound annual revenue growth between now and 2027. By then, those revenues are expected to exceed $2 billion.
In light of this, CEO Pasquale Romano evidently doesnâ€™t view ChargePoint as a high-risk proposition to the companyâ€™s stakeholders. â€œWeâ€™ve had a 10-year track record of shipping products and supporting customers â€¦ We donâ€™t have the risks of a pre-revenue company,â€ explained Romano.
If you believe in the future of charging stations as a growth category, then SBE stock is worth considering for your long-term holdings.
ChargePoint even seems to imply that it helped to create that category. And indeed, the facts confirm that the company was there at the beginning, and will be here for the long haul.
On the date of publication, neither LouisÂ Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louisâ€¯Navellierâ€¯had an unconventional start, as a grad student who accidentally built a market-beating stock system â€” withâ€¯returns rivaling even Warren Buffett. In his latest feat, Louis discovered the â€œMaster Keyâ€ to profiting fromâ€¯the biggest tech revolution of this (or any) generation.Â
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