ChargePoint (CHPT) stock price has imploded this year, falling by over 41% while the S&P 500 and Nasdaq 100 have surged to a record high. It has also underperformed other electric vehicle charging companies like EVGo and Blink Charging.
EVgo has more than doubled in the last twelve months, with 60% of these gains coming on Thursday. Blink Charging stock has dropped by 39% in the last twelve months.
Chargepoint’s market cap has dropped from from over $11.8 billion in 2021 to $582 million today. This is a big reversal for a company that was once the biggest player in the EV charging industry.
ChargePoint’s fall from grace
ChargePoint is a large company in the fast growing electric vehicle charging industry. Unlike EVGo, the company has a large geographical footprint, including in the United States, Canada, Mexico, the United Kingdom, and Switzerland.
In addition to running charging stations, the company sells networked charging hardware, which are then connected through its cloud-based software service.
It is in an industry that will continue growing as the number of electric vehicles on the road rise. There are over 2.2 million EVs in the United States, up from less than 100k a decade ago. Analysts expect that this number will more than double in the coming years.
However, ChargePoint’s business has not done well in the past few years as its sales growth has slowed. Its annual revenue rose from $144.5 million in 2020 to over $506 million in the last financial year. It has made $441 million in the trailing twelve months.
This growth has come at a big cost, with its net loss jumping from over $134 million in 2020 to over $457 million in the last financial year.
As a result, ChargePoint’s need for cash has been elevated as it continued to boost its network and solutions. It has diluted its shareholders as the number of outstanding shares have risen from 11.9 million in 2020 to over 421 million today.
Dilution has a big impact on a company’s shareholders by reducing their percentage ownership of the company. By doing that, it ultimately reduces the earnings per share and their voting power.
The opposite of dilution is a share buyback, where a company repurchases its stock and reduces outstanding shares.
ChargePoint’s business has come under so much pressure that the management issued a going concern warning last year. It has also laid off hundreds of workers in the last few years. Most recently, it laid off 15% of its staff, with the goal of saving between $41 million and $38 million annually. The reorganization costs will be $10 million.
Read more: ChargePoint (CHPT) stock price: good in theory, bad in practice
ChargePoint downgraded by JPMorgan
The most recent negative catalyst for the ChargePoint stock price was a rare downgrade by analysts at JP Morgan. In a note, the analyst slashed the rating from overweight to underweight.
The analyst said that the company would continue underperforming its peers as commercial companies slash their EV adoption. In a separate report, as my colleague covered, the JPMorgan analyst boosted its target for the EVGo stock, pointing to a 80% jump in the next twelve months.
The most recent ChargePoint earnings showed that the company was not doing well even as the number of EVs on the road jumped.
Total revenue in the last quarter stood at $108 million, down from $150 million in the same period last year. In the first six months, revenues dropped from $280 million to $215 million.
The company also continued to report big losses, with its net loss coming in at $67 million in the last quarter.
Analysts expect the upcoming results to show that its business continued to deteriorate. Its revenue estimate is $90.7 million followed by $105.8 million in the next quarter. For the year, analysts expect that its total revenue will be $410 million, an 18.9% decline from last year.
ChargePoint stock price analysis
CHPT chart by TradingView
The weekly chart shows that the CHPT share price peaked at $50 in 2020, and has dropped to a record low of below $2. it invalidated the falling wedge pattern, which formed between 2022 and 2023.
The stock has been moving sideways while its Average True Range (ATR) has moved downwards. That is a sign that it has no volatility.
Therefore, fundamentally, the stock will likely continue falling in the near term. However, in the longer term, a short-squeeze cannot be ruled out. Besides, the company has a high short-interest of 26%, meaning that it can be squeezed.
The immediate risk for the stock is that the company may need to raise additional cash. It ended the last quarter with $243 million in cash and equivalents, meaning that it might run out soon.
Read more: EVgo vs ChargePoint: One is a better EV charging stock
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