ChargePoint Holdings (CHPT 1.92%) shares have been on a roll lately. The stock has jumped nearly 25% over the past month. But shares of the electric vehicle (EV) charging network company would have been even higher if they hadn't dropped by 12.5% this week as of early Friday, according to data provided by S&P Global Market Intelligence.
NYSE: CHPT
Key Data Points
Interest rates matter
Last month's rise in ChargePoint shares didn't come because of any good news from the company. The stock surged as many technology and growth stocks fell back in favor with investors as the market sensed the end of a rising interest rate cycle. The Federal Reserve held rates steady, keeping its benchmark lending rate between 5.25% and 5.50%.
More importantly, for unprofitable, growing companies like ChargePoint, the Fed also signaled that several rate cuts could come in 2024. That could save ChargePoint significant money if it needs to borrow it in the near future. That's a distinct possibility, too, considering that as of Oct. 31, it held under $400 million in cash and equivalents on its balance sheet.
That helps explain why the rally in ChargePoint shares hit a wall this week. The company reported a $130 million operating loss in its fiscal 2024 third-quarter period ended Oct. 31. What's making investors most nervous is that ChargePoint's business seems to be going in the wrong direction.
The business matters more
ChargePoint's third-quarter revenue dropped 12% year over year, and the company replaced its CEO last month. In the third-quarter report, new CEO Rick Wilmer said he was "committed to significantly improving operational execution."
That will be a challenge, though, as more EV makers sign on to use Tesla's proprietary Supercharger network. Tesla is also now selling its charging hardware directly to third parties. Taken together, that all seems to make the market's most recent reaction -- sending ChargePoint shares lower -- the right one.
