What happened
Shares of electric car charging company ChargePoint (CHPT 9.46%) collapsed this morning, tumbling 25% through 10 a.m. ET after a huge earnings miss was reported last night.
Heading into its fiscal Q2 2024, analysts were already pretty downbeat about ChargePoint, forecasting $0.15 per share of losses on sales of $153.2 million -- yet ChargePoint still managed to disappoint. Sales for the quarter were only $150.5 million, and losses were $0.35 per share -- more than twice as bad as expected.
NYSE: CHPT
Key Data Points
So what
But not all the news was bad. ChargePoint may have missed sales estimates, but it still grew its quarterly revenues an impressive 39% year over year. The problem was that ChargePoint earned only a bare 1% gross profit margin on those sales -- down from 17% a year ago because of a $28 million inventory impairment charge. And this tiny profit was then immediately turned into a loss by operating expenses.
Responding to this dynamic, ChargePoint notes that it has plans to cut its operating expenses by $30 million annually, in part by laying off 10% of its workers.
Now what
But will that be enough to save ChargePoint?
On the one hand, the company still seems to be growing its revenue base. Q3 revenues are projected to range from $150 million to $165 million, so they will probably grow sequentially. ChargePoint didn't give an estimate for its profits as calculated according to generally accepted accounting principles (GAAP), but it estimates non-GAAP gross profit margins on those revenues will rise as high as 25%.
But even assuming the maximum guess at revenues ($165 million) times the maximum guess at gross profits (at a 25% non-GAAP margin, that would be $41.2 million), and even taking those non-GAAP gross profits at face value despite their not being GAAP numbers, this still would leave ChargePoint with nowhere near enough gross profit to offset its projected $81 million-plus in operating expenses this coming quarter.
And that's not even counting the further $8 million in severance expenses for ChargePoint's laid-off workers.
And it's not considering the effect of Tesla's (TSLA 2.70%) latest news, either. Tesla, it seems, has just won the rights to install SuperChargers at 2,000 North American Hilton hotel properties. That's 2,000 charging slots that will now definitely not go to ChargePoint, and will not help ChargePoint to grow in the future.
Add it all up, and I have to say: Things are not looking great for ChargePoint stock right now.
