ChargePoint’s Struggles and Future Potential: Is it Time to Invest?
ChargePoint (NYSE: CHPT), a prominent builder of electric vehicle charging stations across North America and Europe, has disappointed many investors. The company went public more than four years ago through a merger with a special purpose acquisition company (SPAC), opening at $32.30 per share on the first day. Currently, its stock trades below $0.60.
Several factors have contributed to this decline. ChargePoint’s top-line growth has slowed significantly, it has reported significant losses, and competition has intensified from Tesla‘s (NASDAQ: TSLA) Superchargers and smaller rivals like EVgo (NASDAQ: EVGO). Furthermore, since its public debut, ChargePoint has increased its outstanding shares by 65% to finance its stock-based compensation and secondary offerings, while it continues to generate substantial cash burn. If the stock price remains under $1, it faces potential delisting.
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However, as Warren Buffett famously advised, investors should be “greedy only when others are fearful.” Currently, there is a significant amount of fear reflected in ChargePoint’s stock price. Analyzing the contrarian perspective, it’s worth considering whether this might be an opportune time to buy before the upcoming earnings report, expected in late May or early June.
Understanding ChargePoint’s Business Model
ChargePoint develops EV charging stations for both residential and commercial clients. By the end of fiscal 2025, it managed 342,000 charging ports, including over 33,000 DC (Level 3) fast chargers, while the remainder were slower Level 2 chargers. In contrast, Tesla operates more than 60,000 Level 3 Superchargers worldwide.
Although Tesla seems like a key competitor, the two companies have differing business models. ChargePoint primarily sells connected charging stations to locations that wish to manage their own charging services and pricing. Additionally, it offers hosts network access, billing, and customer support. Conversely, Tesla’s Superchargers function independently and lack these connection-based services.
This difference makes ChargePoint’s chargers and Tesla’s Superchargers not directly competitive. ChargePoint’s primary competitor is EVgo, which follows a similar business model with over 4,000 charging spots.
ChargePoint’s Performance Over the Past Three Years
ChargePoint witnessed rapid growth during fiscal years 2022 and 2023 as the EV market surged following the pandemic. However, fiscal 2024 brought significant challenges, including rising interest rates that dampened the EV market and diminished demand for new charging stations. Consequently, its adjusted gross margins fell dramatically, while both operating and net losses widened according to Generally Accepted Accounting Principles (GAAP). Additionally, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) plunged further into negative territory.
|
Metric |
FY 2022 |
FY 2023 |
FY 2024 |
FY 2025 |
|---|---|---|---|---|
|
Revenue |
$242 million |
$468 million |
$507 million |
$417 million |
|
Growth (YOY) |
65% |
93% |
8% |
(18%) |
|
Adjusted gross margin |
24% |
20% |
8% |
26% |
|
Operating margin |
(110%) |
(73%) |
(89%) |
(61%) |
|
Net income (loss) |
($299 million) |
($345 million) |
($458 million) |
($283 million) |
|
Adjusted EBITDA |
N/A |
($217 million) |
($273 million) |
($117 million) |
Data source: ChargePoint. YOY = Year-over-year.
Potential for ChargePoint’s Rebound in Coming Years
Nevertheless, fiscal 2025 showed signs of improvement. While full-year revenue declined, adjusted gross margins increased, and operating and net losses narrowed significantly. ChargePoint has implemented a dynamic pricing model to support gross margin growth and made two rounds of workforce reductions (12% of its staff in January and an additional 15% in September) to enhance operating margins.
For the first quarter of fiscal 2026, ChargePoint anticipates a revenue drop of about 7% year over year. However, analysts project an overall annual revenue increase of 11%, albeit contingent on fluctuating tariffs, elevated interest rates, trade tensions, and other market challenges related to EVs.
ChargePoint also expects to achieve “a quarter” of positive adjusted EBITDA in fiscal 2026, with analysts anticipating a full positive EBITDA by fiscal 2027. This stability may help mitigate downside risks and potentially contribute to a rebound in its stock value.
Operating with an enterprise value of $434 million, ChargePoint currently trades at under 1 times its anticipated sales for fiscal 2026. Therefore, any favorable developments could lead to a rise in stock price. At the end of March, 24% of its outstanding shares were shorted, indicating vulnerability to a short squeeze in this turbulent market. This might explain why company insiders have purchased 15 times the number of shares they sold over the past year.
Conclusion: Is Now the Right Time to Buy ChargePoint?
ChargePoint: A Risky Investment With Potential for Growth
ChargePoint remains a risky investment choice. However, if it reports better-than-expected financial results for the first quarter, achieves its goal of a positive quarterly adjusted EBITDA this year, and provides a clearer near-term outlook, it could cut through the current complicated macroeconomic environment. Improved performance could force short-sellers to cover their positions, encourage insider purchasing, and draw interest from deep-value investors in ChargePoint.
Is Now the Right Time to Invest $1,000 in ChargePoint?
Before purchasing stock in ChargePoint, it’s important to consider the following:
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Leo Sun has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
