chargepoint lot
Image courtesy of Chargepoint

The Long and Short of ChargePoint Adopting Tesla Chargers

By:Mike Butler

A look at the bullish and bearish case for CHPT

  • ChargePoint adapts to growing pressure from EV automakers to use Tesla chargers.
  • The charging station company is trading near the lows of the year.
  • Tesla seeing a bigger rally than ChargePoint after the news.

The charging wars wage on as ChargePoint (CHPT) adapts to the growing pressure for Tesla (TSLA) charging capabilities. It's happening because many popular automakers are flipping the switch to Tesla charging capabilities for future EV production. A few weeks ago, Ford (F) and General Motors (GM) announced they would begin using Tesla charging port technology in future EV models.

chargepoint CHPT ytd chart

Interestingly enough, ChargePoint isn't seeing much of a rally from the news. The stock is down near the lows of the year, currently trading at $8.33 after reaching a 2023 high of $13.65 in February.

However, a high implied volatility is predicted for the stock through the rest of the year, with the January 2024 expected move at +-$2.89, which is well over 30% of the current stock price.

Hard to borrow

ChargePoint is hard to borrow, which can mean a high short interest on the stock. This can also result in a short squeeze if sentiment changes to a more bullish outlook. That, in turn, could lead to short stock holders covering to close the position which can create upside pressure on the stock.

tesla TSL ytd chart

Tesla had some red days last week, but the stock is climbing higher on Monday, July 24, after the news broke. The stock has surged well off the lows since the Ford and General Motors news broke in June, and it has continued to secure a stranglehold on the EV charging port battle.

A bullish case for ChargePoint

I'd imagine that including Tesla charging ports at charging stations can only increase demand and make it easier for end-users to find charging stations across the country. With Ford and GM using the technology in future models, the sky is the limit for charging ports across the country.

I also don't mind buying into stocks that seem to benefit from other well-known stocks like Tesla, especially near the lows of the year. Short interest isn't great for bullish movement of course, but it can create violent bullish moves if short stock holders cover to exit positions, as that just creates a flurry of buy orders in the market. We've often seen this in meme stocks like AMC Entertainment (AMC) and GameStop (GME).

A bearish case for ChargePoint

It's hard to be bearish on a stock that's already $8 a share because stocks can only go to $0. But if you believe this is just noise, or you're worried that the lack of a rally after big news like this isn't great for the stock, short interest being high means that shorts could keep piling on—I would be careful with size and risk of a short squeeze moving forward in this high implied volatility underlying.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb  

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