ChargePoint (NYSE:CHPT) is a California-based company that provides electric vehicle (EV) charging networks and charging solutions. The company went public via a special-purpose acquisition company (SPAC) and was initially highly popular with traders. CHPT stock shot up as high as $45 in late 2020 following the launch of its SPAC deal. Since then, however, ChargePoint has drifted lower and lower with the stock recently dipping below the $15 level.

The reason for this isn’t too complicated. ChargePoint came out at a very high valuation, trading above 50 times trailing revenues at one point. The company is also unprofitable and is expected to remain unprofitable through at least the end of 2024. ChargePoint is investing for growth, building out its network of charging stations and services rather than concentrating on earning profits today. However, market conditions have dramatically shifted. Equity investors are no longer willing to underwrite speculative growth companies at high multiples.

Still, ChargePoint was able to buck the trend in at least one important way. In April, ChargePoint raised $300 million of financing via convertible senior notes. These carry an interest rate of 3.5% to 5%, respectively. This is very cheap financing for a company that is still in the early stages of growth and which is far from reaching profitability.

To be fair, the notes are convertible and can turn into CHPT stock in the future if share prices rise significantly. So there is a potential dilutive element if ChargePoint shares really blast off. Regardless, it’s a massive vote of confidence that institutional investors are willing to lend ChargePoint capital at such a low interest rate. In a time when many growth companies are having to pull back on investments in expansion, ChargePoint still has the funds necessary to keep building out its business. And the model is working; analysts see revenues growing 91% this year and 59% in next year.

All this adds up to make ChargePoint a perfect test of the current market’s dynamics. ChargePoint is growing at a rapid pace and nothing has changed on that front. Electric vehicle charging is a secular growth trend; there’s no pandemic hangover or reopening impact to worry about unlike in other areas of the technology sector. Electric vehicle’s share of the automobile market will keep rising throughout the 2020s and provide a strong tailwind for ChargePoint’s outlook. And ChargePoint has validated its business model with several key items including strong sequential revenue growth and financing at an attractive interest rate.

So, if traders are willing to buy unprofitable growth stories again, CHPT stock should surge. But if the market continues to avoid speculative growth equities, CHPT stock will continue to struggle.

On the date of publication, Ian Bezek did not have (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 InvestorPlace.com Publishing Guidelines.