ChargePoint (CHPT 3.15%) is at the forefront of a massive technological transition. The world is moving from combustion engines to electric vehicles (EVs). This transition will necessitate a massive investment in infrastructure to support EVs.
That's the big-picture story of why investors might want to buy ChargePoint. But there are some caveats here that are important to keep in mind, too.
What does ChargePoint do?
ChargePoint makes the infrastructure that supports EV charging. It sells its technology to everyone from homeowners to fleet owners to businesses that offer charging on the road, like a gas station. Between 2020 and 2050, demand for electricity from EVs is expected to increase by as much as 9,000%, according to the National Electrical Manufacturers Association (NEMA).
ChargePoint is right in the middle of the scrum as companies look to stake out a position to take advantage of the growth potential EVs present.
Image source: Getty Images.
That is the opportunity that investors buying ChargePoint before it reports fiscal 2026 second-quarter earnings on or about Aug. 27 are trying to get in on. And ChargePoint has a lot going for it in that regard.
It has a large network of chargers in the field, with customers in both North American and Europe. It has cutting-edge technology, noting it recently introduced a new bidirectional charging system. And it has partnerships with major industry players, such as industrial giant Eaton, with which ChargePoint just inked a partnership.
Meanwhile, ChargePoint has been focused around profitability. Its gross margin has been rising, up seven basis points year over year in the fiscal first quarter of 2026. Its operating expenses fell notably, too. And it reduced its earnings before interest, taxes, depreciation, and amortization (EBITDA) loss by 23% year over year.
The business is moving in a positive direction in some very important ways. If it can show continued progress when it next reports earnings, investors may take a sunnier view of the future here.
ChargePoint is a high-risk investment
All that said, ChargePoint is a stock that only the most aggressive investors will want to buy. It is a money-losing start-up in a fast-changing, competitive market. While it could succeed in establishing a strong foothold, it could just as easily fail in that effort. Note that cost-cutting is a key focus, even though there remains a huge need to invest in things like research and development.
That brings up the question of cash. At the end of the first quarter of fiscal 2026, ChargePoint had roughly $196 million of cash on its balance sheet. That was down from about $225 million just three months earlier.
At that rate of cash burn, ChargePoint only has a couple of years before it will run out of cash. It would likely need to replenish its cash pile well before that point if it wants to continue to compete effectively.
NYSE: CHPT
Key Data Points
The cash situation, combined with the business' ongoing losses and the huge need for more spending, is why ChargePoint's stock price has plunged into penny stock land. That's a sign that Wall Street isn't convinced that ChargePoint will survive without taking a trip through bankruptcy court. Indeed, given the cash situation and the low stock price, it will be hard, or at least very costly, for ChargePoint to tap the capital markets for additional funding.
The reason to buy and the reason to avoid ChargePoint
So the reason to buy ChargePoint is if you believe that it will manage to turn its financial situation around thanks to its success on the business front, through things like technological leadership and key industry partnerships. But the financial situation, which is very weak right now, is also the reason to avoid the company. In fact, even aggressive investors will probably be better off waiting until there's more progress on the company's financial foundation.
Yes, you could miss out on some material early gains if you wait to buy this stock, but if ChargePoint can establish itself in the EV charging space, it will likely have decades of growth ahead of it. If it can't fix the balance sheet issues it is dealing with, however, it could mean a total washout for investors. If you do buy it, go in with a clear understanding of the risks you are taking on.
