ChargePoint Holdings (CHPT) is the largest independent electric vehicle charging operator. ChargePoint controls around 65% of the independent electric vehicle charging market and has been one of the stocks on our radar for the majority of this year.
Recently, ChargePoint has seen its stock decline by approximately -50% over the last 12 months and it has investors wondering...what is really going on at CHPT?
We have identified three things to watch.
Tesla Has Put Other Charging Operators On Notice
Tesla has always been a big player in the electric vehicle charging market, but they really have leveled up in the last 30 days with newly announced partnerships with Ford (F) and GM (GM) to include its NACS connectors in all new models. Also, the automakers will have access to Tesla Supercharger network.
While ChargePoint quickly announced that it will also begin offering Tesla's NACS connectors at its stations as well, the newly formed partnerships by Tesla just reiterates their dominance in the market overall.
2. Profitability Is Far Away For ChargePoint
In this new era of higher interest rates, investors are looking more closely at companies who have been long term unprofitable to gauge how to value them going forward.
ChargePoint has seen its losses grow from -$132 million in fiscal year 2022 to -$344 million in fiscal year 2023. The company did announce they expect losses to be lower in fiscal year 2024 at around -$280 million approximately, but companies are not being rewarded for being unprofitable in this environment.
3. Weak Quarterly Guidance
ChargePoint also has recently announced weaker upcoming quarterly guidance during its earnings release earlier this month. The company guided upcoming quarterly revenue to be between $148 million and $158 million. Analysts had been expecting revenue to be around $165 million in the upcoming quarter.
So, the combination of a larger industry competitor becoming more dominant along with the reporting of weaker financials going forward is a recipe for weak returns.
We are still watching ChargePoint and we are optimistic about their future, but you can't ignore the fact that the current environment for the company is very difficult.
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