When ChargePoint Holdings (CHPT -0.80%) reported full fiscal 2025 earnings, it spent a great deal of time discussing its improving profitability, which was achieved largely by management's cost-cutting. The only problem is that the company is still losing money, and that's not likely to change anytime soon.
Here's what you need to know if you are looking at ChargePoint today.
What does ChargePoint do?
ChargePoint makes the infrastructure that charges electric vehicles (EVs). It sells its products across the spectrum, from charging products used in private homes to charging systems for fleets. A large part of its top line is powered by recurring subscriptions, though product sales still make up the lion's share of its business.
Image source: Getty Images.
The big problem -- and opportunity -- is that EVs are still a relatively new product. It is an opportunity because ChargePoint has the chance to stake out a strong position in what is likely to be a growing industry space.
The problem is that it costs a lot of money to keep up with the technological changes of a new industry. In fiscal 2025, ChargePoint's research and development (R&D) spending totaled $141 million. That was more than the $131 million it spent on sales and marketing.
Just running the day-to-day business (general and administrative expenses) costs nearly $82 million. The company's gross profit was around $101 million. Basically, ChargePoint is nowhere near generating positive earnings.
ChargePoint can only cut so much
In fiscal 2025, the company focused on reducing costs to boost profitability. And it achieved impressive results, with the adjusted gross profit margin rising 8 percentage points year over year by the fourth quarter. Operating expenses declined, too. All in, the company lost less money in 2025 than it did in 2024. There are definitely some positive things going on here.
But there are some very material negatives to consider before buying this stock. The big one is that the business continues to lose money, and that's unlikely to change over the next year. It simply can't afford to stop spending on R&D and sales if it wants to remain a competitor in the still-evolving EV space.
And this brings the story to ChargePoint's balance sheet, which ended fiscal 2025 with around $225 million in cash on it. The big problem with that cash figure is that it fell by over $100 million from the end of fiscal 2024. Essentially, ChargePoint is bleeding red ink and hemorrhaging cash. And there's not much management can do if it wants to remain competitive.
This is a key reason why the stock price is so low today.
It's going to take more than a year
It looks like ChargePoint is in a race against time as it attempts to create a sustainably profitable business. It is highly unlikely that the company achieves this goal over the next 12 months.
So while there's a huge opportunity given the growth of the EV market, there's also a huge risk given ChargePoint's financial position and spending needs. And the risk appears to be coming to a head right now, as the company tries to deal with the fact that its stock price is below the minimum listing standards for the New York Stock Exchange.
ChargePoint is a high-risk investment and will likely remain so a year from now. All but the most aggressive investors will probably want to watch from the sidelines.
