ChargePoint (CHPT +13.35%) has had a difficult journey since its public debut in 2021. The company initially rode the wave of excitement as the electric vehicle (EV) revolution gained momentum, with automakers pivoting toward EVs, spurring demand for charging infrastructure.
However, the landscape has changed. Automakers are scaling back their ambitious EV plans, and the political environment isn't as supportive of EVs and related infrastructure as it once was. This and other factors have pushed ChargePoint's stock price down to a staggering low.
ChargePoint looks like a bargain at this price, trading at just 0.6 times its sales. But before jumping in, investors should carefully consider what's driving these changes, and whether this dirt cheap entry point is a golden opportunity or an ominous warning sign.
NYSE: CHPT
Key Data Points
ChargePoint is a major player in charging infrastructure
ChargePoint operates one of the largest charging networks in the world, with stations spread across the United States and Europe. According to data from the website EVAdoption, ChargePoint operates charging stations across 15,454 locations with 48,946 charging ports. Tesla, its top competitor, has 5,872 locations with 12,412 charging ports.
One would expect the adoption of EVs to bode well for charger operators. Last year, a record 1.3 million EVs were sold in the United States, a 64% increase from 2022 EV sales. In the fourth quarter, EVs accounted for 8.7% of new vehicle sales, up from 7.3% in the first quarter of 2023.
Sales of EVs have steadily increased over the past several years. Several factors have spurred the adoption of these vehicles, including government incentives through rebates, tax credits, and subsidies. In addition, automakers began investing more in EV production in recent years.
The company has faced its share of challenges
Despite some tailwinds for the EV industry, ChargePoint has had a rough go. Higher interest rates weighed on lending activity, creating uncertainty for consumers and businesses, who cut back on spending. As a result, EV adoption was slower than expected, and ChargePoint management said this resulted in slower deployment of charging infrastructure. Struggles continued last year, and ChargePoint's total revenue was $417 million, a 17.5% decline from a year earlier.
It also faces increasing competition from Tesla for its charging network infrastructure. Despite an extensive charging network, Tesla offers 12,580 fast-charging ports across 1,246 locations. In comparison, ChargePoint has 1,675 fast-charging ports across 1,147 locations.
Image source: Getty Images.
Looking ahead, the backdrop for EVs is less favorable than in recent years. President Donald Trump's administration is trying to claw back project funding and is putting less emphasis on renewables and related infrastructure.
On Feb. 7, the Trump administration ordered states to halt the $5 billion National Electric Vehicle Infrastructure (NEVI) program. This program was created as part of the 2021 Infrastructure Investment and Jobs Act to build EV chargers nationwide. The move to freeze funding will face legal challenges. Either way, it creates more near-term uncertainty for ChargePoint's business.
Is it a buy?
Going forward, ChargePoint faces significant headwinds. With both the executive branch and Congress led by Republicans, EVs won't get the same support they did under the previous administration.
Then there is the question of ChargePoint's burn rate. Last year, the company made a gross profit of $100.6 million. However, operational expenses, including research and development, sales and marketing, and other general administrative expenses, were significant, and the company posted a $253 million loss from operations.
This improved from its $450 million loss from operations in 2024. However, the company must continue to make progress in cutting expenses and growing in a tough operating environment.
ChargePoint has about $225 million in cash on its balance sheet. Given its burn rate, it wouldn't be surprising if the company had to tap markets to raise more funds, which it has repeatedly done since going public. Since mid-2021, diluted shares outstanding have increased 43% to 448 million -- significantly diluting shareholders in the process.
ChargePoint has its work cut out for it and needs to cut expenses and improve its bottom line. Even so, the company is also facing slowing revenue growth. Given ChargePoint's challenges, investors are better off avoiding the stock until it shows substantial progress in improving across these key areas.
