As automakers increasingly embraced electrification, ChargePoint's (CHPT -0.37%) value proposition as an early mover in the charging-station niche market became evident to investors in late 2020. Fast-forward to mid-2022, and the ChargePoint stock rally has lost its power supply, it seems.
ChargePoint boasts over 174,000 networked ports across Europe and North America, so it's not as if the company lacks a substantial market footprint. Besides, ChargePoint demonstrated 65% revenue growth in FY 2022 (which started in February of 2021, a year in which the company forged multiple partnerships, advanced its fleet offerings, and made strides in Europe).
Given the company's momentum in these areas, the first quarter of FY 2023 should have been ChargePoint's chance to finally quell any remaining skepticism and send the bears into hibernation. As it turns out, though, ChargePoint's positive data points may have been overshadowed by a sticking point or two.
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Hard to predict, indeed
Like thread through a tapestry, the motif of supply chain issues has consistently run through earnings reports in 2022's first half. ChargePoint hasn't been an exception to this rule, as President and CEO Pasquale Romano cited "expected significant headwinds due to global supply constraints" as a mitigating factor in the company's first-quarter fiscal 2023 results.
Elsewhere, Romano warned, "It's hard to predict what things [parts] we're going to receive, so we're planning on things staying as is" -- not necessarily the comforting words investors are looking for now. For what it's worth, Romano assured that ChargePoint is working to improve its supply chain management and when the situation improves, "we will benefit."
If investors are willing to forgive the uncertainty surrounding ChargePoint's parts-sourcing issues, they might be able to cherry-pick some fairly impressive data points from the company's fiscal first quarter. In particular, ChargePoint doubled its revenue year over year to $81.6 million, thereby beating Wall Street's consensus forecast of $75.7 million and delivering above the company's previously anticipated range of $72 million to $77 million.
ChargePoint also highlighted the company's liquidity as of April 30, consisting of $541 million in cash on the company's balance sheet. So far, at least on a surface level, it certainly appears that ChargePoint is effectively working through any supply chain headwinds.
Why the downbeat response, then?
Despite these encouraging fiscal figures, and irrespective of Romano's claim of "positive first-quarter results," ChargePoint stock soon fell nearly 4% in after-hours trading in response to the company's quarterly data release. At the end of the following trading session, the stock was down 2.66%, closing at $12.45.
What could investors possibly have objected to? One sticking point might have been that, out of the $541 million in cash on ChargePoint's balance sheet, $300 million appears to have come from financing in the form of convertible senior notes, which should be viewed as money borrowed, not money owned. ChargePoint spins this in its quarterly press release as a "$300 million cash raise" as part of the company's "fortified balance sheet," but there's no getting around the fact that it's debt, plain and simple.
That point is worth noting, but it's probably not what induced an initial negative response from the trading community. Rather, investors likely bristled at ChargePoint's unfortunate swing from $82.29 million net income in the year-earlier quarter to an $89.27 million net loss in the recently reported quarter. Even with supply chain constraints acknowledged, that bottom-line result is a bitter pill to swallow.
It's going to be a long three months before ChargePoint gets another chance to impress Wall Street with an earnings event. As investors contemplate the good, bad, and ugly data points -- and as supply constraints remain "hard to predict" for the foreseeable future -- watching and waiting is likely the best policy now as ChargePoint stock continues to lose value.
