The EV charging company’s guidance disappoints, but is this an opportunity to buy the stock?
ChargePoint Holdings (CHPT -16.27%) stock slumped this morning, plunging 23.1% at its lowest point in trading through 11:20 a.m. ET Thursday. ChargePoint operates the largest electric vehicle (EV) charging network in the U.S., but demand has failed to keep up with the company’s expectations. The evidence lies in ChargePoint’s latest quarterly numbers, released yesterday.
Although ChargePoint’s net loss shrank in the second quarter, the company’s guidance has left investors in the lurch.
ChargePoint’s revenue continues to fall
Here are some key numbers from ChargePoint’s second-quarter earnings report:
- Revenue: Down 28% year over year to $108.5 million
- Gross margin: 24% versus 1% in the year-ago quarter
- Net loss: Improved to $68.9 million from $125.3 million in the year-ago period
The improvement in ChargePoint’s gross margin and losses looks impressive. Still, management primarily credited it to year-over-year comparisons, having booked inventory impairment charges in Q2 last year that hit its bottom line.
More importantly, ChargePoint’s top line is showing no signs of a recovery yet, with revenue from its primary business of networked charging systems slumping 44% year over year in the second quarter. Although its subscription revenue rose 21%, it wasn’t enough to offset weak demand for ChargePoint’s charging systems.
Is there any hope left for ChargePoint stock?
There’s no point in mincing words when it comes to ChargePoint. The truth is that ChargePoint is facing plenty of challenges. On the one hand, demand for EVs has softened globally, and on the other, competition in EV charging is heating up.
ChargePoint knows these are tough times and it must save money to slow down its cash burn, which is why it has also announced plans to lay off 15% of its global workforce. With the company also projecting revenue of only $85 million to $95 million for the third quarter — meaning an 18% drop year over year — ChargePoint stock will need a really solid catalyst to rebound.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
