ChargePoint Holdings(NYSE: CHPT) provided its quarterly update this week, and it disappointed investors. That, along with the bigger picture of electric vehicle (EV) sales, has investors dumping ChargePoint stock.
As of Thursday afternoon trading, ChargePoint stock had tumbled by 25% this week, according to data provided by S&P Global Market Intelligence. That drove the stock near its 2024 lows and down nearly 40% year to date.
ChargePoint revenue is dwindling
The investment thesis for EV charging companies like ChargePoint is largely based on growing global EV demand. But new entrants in the EV market like General Motors, Ford Motor Company, and Volkswagen are throttling back on production plans. And just this week Swedish automaker Volvo said it was abandoning its plan to sell only EVs by 2030.
Those decisions came as market leader Tesla produced 14% fewer EVs in the second quarter compared to the year-ago period. Slowing EV sales have ended up hitting ChargePoint and its growth plans hard. Investors were disappointed with the $109 million in sales the company reported in its fiscal 2025 second quarter ended July 31, 2024. And even more disappointing was the company's estimate for fiscal third-quarter revenue of just $90 million at the midpoint of its guidance range.
ChargePoint also noted that it would be reorganizing its global workforce to reduce headcount by about 15%. The company also pushed back its profitability goals. It previously hoped to report positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) on a non-GAAP (adjusted) basis by the end of January 2025. It now has pushed that back by as much as one year.
The reaction to all of its news makes sense. ChargePoint's business is degrading and that might not change unless or until EV sales growth reignites. Without more EVs on the road, ChargePoint is likely to remain in survival mode.
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Howard Smith has positions in ChargePoint and Tesla. The Motley Fool has positions in and recommends Tesla and Volkswagen Ag. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
