Short Sellers Are Targeting ChargePoint Holdings Right Now

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Short selling data can help active investors avoid losses. If a stock has a high level of short interest, it indicates that hedge funds expect it to fall.

Here, we are going to look at the short interest data on ChargePoint Holdings (CHPT:US). ChargePoint is an American electric vehicle (EV) infrastructure company that owns a large network of EV charging stations. Currently, it has over 200,000 charging stations across the US and Europe. It is listed on the New York Stock Exchange and has a market cap of approximately $3.91 billion at present.

ChargePoint Has High Short Interest

Analyzing the data on ChargePoint, we see a couple of red flags.

The first is that short interest is quite high. Currently, 88.34 million CHPT shares are on loan. That represents approximately 33.7% of the free float. Utilization is 100% meaning that demand for the stock from short sellers is strong.

The second red flag is that the number of shares on loan has been steadily rising over the last 12 months. This time last year, around 40 million shares were on loan. Today, however, the figure is more than double that. This tells us that hedge funds have been growing increasingly bearish on the stock.

It’s worth noting that ChargePoint isn’t the only EV infrastructure company that the short sellers are targeting right now. Recently, we have highlighted high levels of short interest at both Blink Charging Co and EVgo.

Why Are Hedge Funds Shorting ChargePoint Stock?

As for why the short sellers are targeting ChargePoint Holdings, it may be because they expect the company to disappoint on the revenue / earnings front. For the third quarter of 2022, the company missed analysts’ revenue forecast, posting revenue of $125 million versus the consensus forecast of $132 million.

Alternatively, they may be focusing on the company’s lack of profitability. For the year ending January 31, 2023, ChargePoint is forecast to post a net loss of $333 million. Now that we’re no longer in an era of free money, unprofitable companies are very much out of favor.

Of course, the short sellers may simply believe that the EV charging company does not deserve a market cap of $3.91 billion. For the year ending January 31, 2023, sales are expected to come in at $480 million. So, the price-to-sales ratio is quite high currently.

Whatever it is the short sellers are focused on here, we think caution is warranted towards the stock in the near term. The high level of short interest indicates that sophisticated investors see downside risk.