What happened
U.S. stock markets have been a bit mixed this week with technology shares making the only real significant move higher. The tech-heavy Nasdaq Composite index is higher by 1.2% for the week as of early Friday morning.
But stocks in the electric vehicle (EV) sector have jumped significantly more than that index so far this week. That includes a resounding 80% jump in shares of TravelCenters of America (TA) after the owner of a network of fueling stations suddenly became part of the EV infrastructure framework as the target of an acquisition. EV charging network company ChargePoint Holdings (CHPT -3.73%) and luxury electric vehicle maker Lucid Group (LCID 1.19%) were also higher by 12% and 6%, respectively, since last Friday's close, according to data provided by S&P Global Market Intelligence.
So what
TravelCenters of America may now be an EV name, but it won't be publicly traded for much longer after energy giant BP announced it was buying the leading travel center operator for $1.3 billion in cash. BP will utilize that network of fueling stations and convenience stores to expand its EV charging offerings as well as other emerging transportations fuels such as hydrogen, the company said.
That deal gives investors insight into the future landscape for ChargePoint and other EV charging network companies. It's also significant to note that it comes on the heels of the announced buyout of ChargePoint competitor Volta by oil giant Shell last month.
Image source: Getty Images.
Now what
The Volta acquisition announcement sent that stock soaring by more than 20%. But investors who had been in that stock for any length of time prior to that announcement didn't make out well. The $169 million valuation was still more than 80% below where the stock traded one year earlier. That indicated that valuations of charging companies were far ahead of themselves, and ChargePoint is no exception.
The $1.3 billion valuation for TA, however, was at an 84% premium to the average trading price of TA for the month prior to the announcement. The takeaway for investors is that the landscape for EV manufacturers and charging networks continues to evolve.
BP didn't buy TravelCenters for any existing EV assets, but it will soon contain charging infrastructure. BP also announced this week it has plans to invest $1 billion for EV charging across the U.S. by 2030. It expects its global network of 22,000 EV charging points to grow to more than 100,000 by then.
ChargePoint already has more than 200,000 charging points in North America and Europe. But it has yet to achieve profitability and investors shouldn't expect that milestone to be met anytime soon. EV investing requires a very long time horizon, and is perhaps best entered into with a basket of stocks. The landscape continues to be defined in the sector, but a basket of these names would have provided outsize returns this week.