Is It Time to Give Up on ChargePoint Stock?

ChargePoint (CHPT -6.76%), the leading builder of electric-vehicle (EV) charging stations in North America and Europe, posted its latest earnings report on Sept. 4. For the second quarter of fiscal 2025, which ended on July 31, the company's revenue declined 28% year over year to $108.5 million and missed analysts' estimates by $4.5 million. However, it still narrowed its net loss from $125.3 million to $68.9 million, or $0.16 per share, which matched the consensus forecast.

ChargePoint's numbers didn't please investors, and the company's stock slumped to an all-time low. It has also declined more than 97% from its all-time high in December 2020. Is it finally time to abandon this burnt-out EV stock?

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What happened to ChargePoint?

ChargePoint builds charging stations for homes, retail businesses that want to attract more customers, and companies with fleets of EVs. It's already built more than 1 million charging points across North America and Europe.

The company went public by merging with a special purpose acquisition company (SPAC) in February 2021. It actually exceeded its pre-merger estimates by growing revenue by 65% in fiscal 2022 and 94% in fiscal 2023.

But in fiscal 2024, the company's revenue only rose 8% as the EV market cooled off. It also faced stiff competition from Tesla's growing network of Level 3 Superchargers, which are faster than ChargePoint's own Level 2 chargers and compatible with other brands of EVs and other smaller challengers like Blink.

In the first half of fiscal 2025, ChargePoint's revenue declined 23% year over year to $215.6 million. Its 24% growth in subscription revenue (32% of its top line) couldn't offset its 39% decline in network charging-systems revenue (60% of its top line). Its gross margin more than doubled to 22.8% in the first half, but that was because it lapped some one-time impairment charges and sold fewer low-margin charging systems, compared to its higher-margin subscription plans.

That's why we shouldn't cheer the company's bottom-line improvements yet. It narrowed its operating loss year over year from $203.3 million to $129.9 million in the first half, but operating expenses will rise if the company starts building more charging systems again.

It expects its slowdown to worsen

That expansion won't happen anytime soon. ChargePoint expects to generate just $85 million-$95 million in revenue in the third quarter, which would represent a 14%-23% decline from a year ago as it continues to face tough macro and competitive headwinds.

ChargePoint has also been aggressively cutting costs instead of expanding. It announced it would lay off another 15% of its workforce -- which follows two similar rounds of layoffs over the past year -- and focus on streamlining its business to achieve positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by fiscal 2026.

For the full year, analysts expect the company's revenue to decline 10% to $453.7 million as its adjusted EBITDA improves from negative $272.7 million to negative $130.2 million. That's a dim outlook for a company that ended the quarter with just $243.3 million in cash and equivalents, but its stock looks cheap at less than two times this year's sales.

Wall Street's estimates could be too optimistic

ChargePoint's stock looks like a bargain if you believe Wall Street's estimates. Analysts expect its revenue to jump 29% in fiscal 2026 and 31% in fiscal 2027 as the macro environment improves and the EV market warms up again.

Unfortunately, ChargePoint repeatedly missed those expectations in the past. It also doesn't seem well-equipped to tackle Tesla's Superchargers, which are becoming synonymous with EV-charging networks across the U.S. and many other markets.

In addition, it will need to keep raising cash with more debt and equity offerings to stay afloat. It's already increased its share count by 34% over the past three years and ended the second quarter with an alarming high debt-to-equity ratio of 3.3.

All of that red ink, dilution, and leverage could make it a tough stock to own as long as interest rates stay elevated. That might be why the company's insiders sold more than three times as many shares as they bought over the past 12 months.