Source: Michael Vi / Shutterstock.com
Most growth stocks are seeing significant declines today as the Nasdaq Composite drops more than 1.5% in early afternoon trading. However, some companies in high-growth areas of the market, including ChargePoint (NYSE:CHPT), are down even more in today’s session — and CHPT stock isn’t even traded on the Nasdaq. At the time of this writing, ChargePoint is down more than 6% as investors price in macro and company-specific headwinds.
On the macro front, the University of Michigan’s Index of Consumer Sentiment sunk 2.6% in September to 67.7 points. That’s stoking concerns that higher rates could be translating into a rather depressed mood among consumers. Per the survey, “sentiment is currently about 35% above the all-time historic low reached in June of 2022 but remains shy of the historical average reading of 86.”
For ChargePoint in particular, investors have a number of company-specific headwinds to contend with as well. For one, if economic conditions deteriorate and electric vehicle (EV) adoption slows, the company’s business model could be under pressure. Additionally, more recent concerns are arising from investors who may be watching insider selling activity.
In September, Director Michael Linse made a rather big sale, discarding more than 2.3 million shares of CHPT stock at prices ranging between $5.70 and $5.74.
Let’s dive into what investors may want to make of ChargePoint in light of these factors.
CHPT Stock Sinks as Investors Digest Potential Headwinds
Insider selling activity can be a signal that investors take as a reason to steer clear of a particular stock. This is increasingly true when a given insider sale is large and not spread over a significant amount of time.
ChargePoint’s stock chart on a year-to-date (YTD) basis doesn’t look great. Zoom out to the time of this company’s initial public offering (IPO) and it’s clear that investors who got in early haven’t been rewarded. Accordingly, with a number of experts citing CHPT stock as an example of a potential value trap, this large insider sale doesn’t necessarily signal to many retail investors that now’s the time to buy this deep-value pick.
It’s my view that the EV sector is going to have quite a strong and long runway for growth. EV charging companies like ChargePoint, with strong market share and growth prospects, could outperform. However, investors want profitability right now — and that’s something ChargePoint and its peers have struggled with. Until the economic backdrop changes, this is a stock I think investors are right to be concerned about. Certainly, this insider sale doesn’t help the bull case for shares.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the biedexmarkets.com.com Publishing Guidelines.
