Why ChargePoint Stock Is Falling Today | The Motley Fool

What happened

Shares of ChargePoint Holdings (CHPT 3.05%) are down Wednesday as investors adjust to the news that U.S. inflation shows no signs of ebbing. In response to the June Consumer Price Index readout, the market has bid down growth stocks in general. But that isn't the only factor leading some to unplug from the electric vehicle (EV) charging stock. An insider transaction is also motivating traders to click the sell button.

As of 1 p.m. ET, shares of ChargePoint were down 0.8%, having largely recovered from an earlier slide of as much as 5.7%.

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NYSE: CHPT

ChargePoint Holdings Inc.Today's Change(-3.05%) $-0.17Current Price$5.41

Key Data Points

Market Cap$128MDay's Range$5.41 - $5.7452wk Range$5.25 - $17.78Volume458KAvg Vol538KGross Margin29.37%

So what

U.S. inflation soared to a new four-decade high of 9.1% in June. Investors, consequently, are betting that higher prices will likely deter people from purchasing new vehicles -- namely, EVs. If that's true, EV-charging infrastructure companies like ChargePoint will see lower demand for their services.

In addition, according to a regulatory filing submitted Tuesday, ChargePoint board member Michael Linse sold 1,696,646 shares of the company in two transactions for a total of about $23 million on July 8. 

Now what

While it's understandable that some investors are looking to move away from growth stocks like ChargePoint as high inflation persists, it's important to also recognize that inflation won't be a stake through the heart of the EV industry. It's widely expected that EV adoption will grow in the coming years, and drivers will need places to charge their vehicles.

Similarly, investors oftentimes view insiders' decisions to sell shares as ominous signs, speculating that such moves mean there's something concerning about the company's prospects that the public doesn't know yet. This, however, is faulty logic. There are many reasons why an insider may choose to sell shares -- only one of which may be the knowledge that there's something troubling about the company.