ChargePoint (CHPT -3.39%) has disappointed a lot of investors since its public debut. The electric vehicle (EV) charging infrastructure builder went public by merging with a special purpose acquisition company (SPAC) in March 2021, and its stock opened at $32.30.
But today, it trades at about $1.25. Its investors headed for the exits as it broadly missed its initial growth estimates and racked up staggering losses.
Image source: Getty Images.
Yet ChargePoint is still a divisive stock, with Wall Street's price targets ranging from a low of $1.20 to a high of $4. Evercore ISI analyst James West, who set the highest price target, expects the company to face some near-term disruptions as it restructures its sales and marketing teams to cut costs -- but he also expects its year-over-year revenue declines to bottom out this year. So should you buy this unloved EV infrastructure stock while it's still well below $4 a share?
Why did ChargePoint's stock collapse?
ChargePoint deploys EV charging stations for homes, businesses, and companies. It directly managed 329,000 charging ports in North America and Europe at the end of its latest quarter, representing 20% growth from a year ago, and it served around 80% of the Fortune 500 companies.
ChargePoint established an early mover's advantage when it was founded 17 years ago, but it now faces tough competition from Tesla's Superchargers and faster-growing EV charging companies like EVgo. To make matters worse, most of ChargePoint's network still runs on the slower Level 1 and Level 2 chargers instead of the Level 3 chargers used across Tesla's Supercharging network. EVgo also provides a lot of Level 3 chargers.
That competition -- along with rising interest rates, a cooling EV market, and the high costs of constructing new EV charging stations -- caused its revenue growth to decelerate over the past two years as it bled red ink.
|
Metric |
FY 2022 |
FY 2023 |
FY 2024 |
9M FY 2025 |
|---|---|---|---|---|
|
Revenue |
$242 million |
$468 million |
$507 million |
$315 million |
|
Growth (YOY) |
65% |
93% |
8% |
(19%) |
|
Operating margin |
(110%) |
(73%) |
(89%) |
(63%) |
|
Net income (loss) |
($299 million) |
($345 million) |
($458 million) |
($218 million) |
|
Adjusted EBITDA |
N/A |
($217 million) |
($273 million) |
($99 million) |
Data source: ChargePoint. YOY = Year-over-year. EBITDA = earnings before interest, taxes, depreciation, and amortization. FY 2025 ends in January 2025.
For the full year, ChargePoint expects its revenue to decline 17% to 19%. Analysts expect its revenue to drop 18% to $415 million as it slightly narrows its net loss to $268 million.
Prior to going public, ChargePoint claimed it could generate $984 million in revenue in fiscal 2025 as it achieved its first positive adjusted EBITDA of $86 million. But it clearly overpromised and underdelivered, and its stock collapsed. As the bulls fled, ChargePoint diluted its investors with more secondary offerings to raise fresh cash and stock-based compensation to subsidize its salaries. That's why its number of outstanding shares has risen nearly 60% since its SPAC-backed debut.
Could ChargePoint be a contrarian play?
ChargePoint's future might seem bleak. But with an enterprise value of $620 million, its stock looks dirt cheap at 1.2 times next year's sales. Its gross margin is also improving again as it laps some steep impairment charges in fiscal 2024, and it expects its quarterly adjusted EBITDA to turn positive in fiscal 2026 as it continues to cut costs.
As for its balance sheet, ChargePoint still held $220 million in cash and equivalents at the end of the third quarter of fiscal 2025. It won't face any debt maturities until 2028, and it hasn't drawn a single dollar from its $150 million revolving credit facility yet. In other words, it won't go bankrupt anytime soon.
ChargePoint's long-term plan is to expand its charging networks, roll out more Level 3 chargers, ramp up its higher-margin subscriptions, and shift more of its supply chain to Asian manufacturers to reduce its production costs. Assuming it achieves those goals, analysts expect its revenue to grow 25% in both fiscal 2026 and fiscal 2027.
Should you buy ChargePoint at these levels?
ChargePoint isn't down for the count, but it hasn't proven its business model is sustainable. It doesn't have any clear advantages against Tesla's Superchargers, which are now compatible with a growing list of third-party EVs, and it needs to significantly expand its networks and subscription services for economies of scale to kick in.
So for now, I wouldn't buy ChargePoint's stock and expect it to soar to $4 anytime soon. Instead, I'd avoid it until clearer signs of a long-term turnaround actually appear.
