ChargePoint(NYSE: CHPT) hasn't minted any millionaires since its public debut. The builder of electric vehicle (EV) charging stations went public by merging with a special purpose acquisition company (SPAC) on March 1, 2021, and its stock opened at $32.30 with an enterprise value of nearly $9 billion.
But today, ChargePoint's stock trades at just over $1 a share with an enterprise value of about $550 million. It lost more than 90% of its value as its growth stalled out, it faced tougher competitors, and its losses widened. Rising interest rates also popped its bubbly valuations.
Could this unloved green energy stock recover over the next few years and generate some millionaire-making gains? Or is it destined to drop even lower and fade away?
Image source: Getty Images.
Why did ChargePoint's stock run out of juice?
ChargePoint builds EV charging stations for homes, businesses, and companies that operate fleets of EVs. It directly managed 315,000 charging ports in North America and Europe in its latest quarter. Its roaming partnerships also give its drivers access to 1.1 million charging points worldwide.
ChargePoint was founded 17 years ago and established an early mover's advantage in the EV charging market. But today, it faces fierce competition from Tesla's (NASDAQ: TSLA) growing network of Level 3 Superchargers, which are faster than its Level 1 and Level 2 chargers and compatible with a growing list of third-party EVs. ChargePoint has been rolling out more Level 3 chargers, but most of its stations still use its slower Level 1 and Level 2 chargers.
ChargePoint still needs to ramp up its production of faster chargers, expand its networks, lock more drivers into its higher-margin subscriptions, and narrow its losses. But over the past three and a half fiscal years, its top-line growth stalled out and it stayed deeply unprofitable.
Metric | FY 2022 | FY 2023 | FY 2024 | 1H 2025 |
|---|---|---|---|---|
Revenue | $242 million | $468 million | $507 million | $216 million |
Growth (YOY) | 65% | 93% | 8% | (23%) |
Operating margin | (110%) | (73%) | (89%) | (60%) |
Net income (loss) | ($299 million) | ($345 million) | ($458 million) | ($141 million) |
Data source: ChargePoint. YOY = Year-over-year. Fiscal year ends in January of the calendar year.
That slowdown can be attributed to higher interest rates, which prevented its commercial customers from installing new charging stations; the cooling EV market, and stiff competition from Tesla and faster-growing rivals like EVgo(NASDAQ: EVGO).
Can ChargePoint recover?
For fiscal 2025 (which ends in January 2025), analysts expect ChargePoint's revenue to drop 13% to $439 million as it narrows its net loss to $258 million. For fiscal 2026, they expect its revenue to grow 28% to $562 million as it narrows its net loss to $163 million. That outlook suggests ChargePoint's business will recover as interest rates decline and the EV market grows again. In its latest conference call, it predicted its business would stabilize in the second half of fiscal 2025 as those macro tailwinds kick in, it resolves its inventory issues, and it beefs up its manufacturing capabilities in Asia.
But we should be skeptical of that rosy outlook for three reasons. First, it's narrowing its net losses by cutting costs and laying off its employees -- so it's actually shrinking when it should be expanding. If it throttles its own expansion, economies of scale won't kick in and dilute its operating expenses.
Second, ChargePoint's balance sheet is shaky. It ended the second quarter of fiscal 2025 with just $243 million in cash and equivalents, and its high debt-to-equity ratio of 3.3 doesn't give it any room to raise fresh cash at reasonable rates. Lastly, it's increased its share count by a whopping 55% since its public debut with its secondary offerings and high stock-based compensation. Its insiders have also been net sellers of the stock over the past 12 months. That constant dilution and chilly insider sentiment could cap its near-term gains even if it stabilizes its business.
Is ChargePoint a millionaire-maker stock?
With an enterprise value of $550 million, ChargePoint trades at just 1.3 times this year's sales. EVgo trades at 2 times this year's sales, but analysts expect its revenue to surge 60% in 2024 and 39% in 2025 as it expands its smaller network of chargers.
ChargePoint's stock might seem undervalued, but it could be marginalized by Tesla, EVgo, and other competitors over the next few years. Therefore, I think it's far more likely to cause more pain than generate millionaire-making gains for its contrarian investors.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
