ChargePoint Holdings, Inc. (NYSE: CHPT)

ChargePoint Holdings, Inc. (NYSE: CHPT) provides technological solutions for electric vehicle (EV) charging. The company designs, develops, and sells networked EV charging infrastructure, which connects through cloud-based services. These services allow charging system owners to manage their stations while enabling drivers to locate, reserve, authenticate, and conduct EV charging transactions.

Positive Growth Prospects

• Improved Gross Margins and Cost Management: ChargePoint has significantly enhanced its financial efficiency, with GAAP gross margin improving from -22% to 23% and non-GAAP gross margin rising from -18% to 26%. This improvement is largely attributed to better inventory management and the absence of prior-year impairment charges. Additionally, the company demonstrated strong cost control, reducing GAAP operating expenses by 30% and non-GAAP operating expenses by 28%, reflecting a disciplined approach to operational efficiency.
• Growth in Subscription Revenue: Despite a decline in total revenue, ChargePoint’s subscription revenue continued to expand, growing by 19% year-over-year to USD 36.4 million. This highlights the company's ability to build a stable and recurring revenue stream, which can provide financial resilience amid market fluctuations. The focus on cloud-based software solutions is proving to be a key driver of sustained business growth.
• Strengthened Financial Position: ChargePoint’s financial stability remains solid, with USD 219.8 million in cash and cash equivalents, ensuring liquidity for ongoing operations. Furthermore, the company has no debt maturities until 2028, and its USD 150 million revolving credit facility remains undrawn, giving it flexibility to navigate market uncertainties and invest in future expansion.
• Strategic Leadership and Product Expansion: ChargePoint continues to strengthen its leadership team, appointing David Vice as Chief Revenue Officer to drive revenue growth and oversee global sales and marketing efforts. Additionally, the company introduced the CPF50 Level 2 charging solution, aimed at making fleet electrification more accessible, and launched the ChargePoint Essential cloud plan to expand its offerings for small businesses and multi-family housing. These strategic moves reinforce its market presence and product diversification.
• Optimistic Future Guidance: The company remains committed to returning to growth, providing fourth-quarter revenue guidance between USD 95 million and USD 105 million. ChargePoint also reaffirmed its goal of achieving positive non-GAAP Adjusted EBITDA in a quarter of fiscal year 2026, indicating confidence in its long-term financial trajectory and ability to streamline operations for profitability.

Growth Challenges

• Declining Overall Revenue: ChargePoint reported third-quarter revenue of USD 99.6 million, a 10% decline from the USD 110.3 million recorded in the same period last year. This drop was primarily driven by a 29% year-over-year decrease in networked charging systems revenue, signaling weaker demand for its core hardware products. The decline raises concerns about ChargePoint’s ability to sustain growth in an increasingly competitive market.
• Continued Losses Despite Improvement: While the company has reduced its net losses, ChargePoint still reported a GAAP net loss of USD 77.6 million and a non-GAAP pre-tax net loss of USD 40.7 million for the quarter. Although these figures reflect substantial improvements from the prior year, they indicate that the company remains unprofitable and has yet to achieve sustainable profitability.
• Challenges in Hardware Sales: The significant drop in networked charging system revenue suggests that ChargePoint is facing challenges in hardware sales, possibly due to slowing EV adoption rates or increased competition. While subscription revenue growth is encouraging, the company must address the decline in hardware sales to maintain a balanced revenue mix.
• Uncertain Market Conditions: Despite record EV sales, ChargePoint’s declining revenue suggests it may be struggling to capitalize on industry growth. Market conditions remain unpredictable, with supply chain constraints, evolving regulations, and increasing competition from other EV charging providers potentially affecting its ability to scale efficiently.
• Pressure to Meet Future Profitability Targets: ChargePoint’s commitment to achieving positive non-GAAP Adjusted EBITDA in fiscal year 2026 places pressure on the company to deliver operational efficiencies while sustaining revenue growth. If market conditions remain challenging or cost reductions do not translate into higher profitability, it could struggle to meet this target, affecting investor confidence and long-term financial stability.

Technical Observation (on the daily chart):

The stock is in a strong downtrend, trading below both the 21-day (USD 0.84) and 50-day (USD 1.00) moving averages, indicating continued bearish momentum. RSI at 28.16 suggests oversold conditions, hinting at a possible short-term bounce, but confirmation is needed. Increased selling volume reinforces weakness, with key support around USD 0.60 and potential downside to USD 0.50 if it breaks. A reversal would require a move above USD 0.84 and USD 1.00 with strong buying volume.

ChargePoint’s third-quarter performance reflects both progress and challenges. While the company improved its gross margins, reduced operating expenses, and grew subscription revenue by 19%, overall revenue declined by 10%, driven by a significant drop in hardware sales. Financial stability remains strong, with ample liquidity and no near-term debt maturities, yet the company continues to operate at a loss despite narrowing deficits. Strategic leadership changes and new product offerings position ChargePoint for future growth, but market uncertainties and competitive pressures pose risks. The company’s ability to achieve its goal of positive non-GAAP Adjusted EBITDA in fiscal 2026 remains a key focus for investors. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to ChargePoint Holdings, Inc. (NYSE: CHPT) at the closing market price of USD 0.63 as of February 25,2025. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is February 25,2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.