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ChargePoint Earnings: Lowering Stock Valuation on Below Expectation Results

Margins decline and revenue come in toward the low end of ChargePoint’s guidance.

Pictogram with symbol on blue background for charging station at a fast charging station for electric cars.
Securities In This Article
ChargePoint Holdings Inc Ordinary Shares - Class A
(CHPT)

Key Morningstar Metrics for ChargePoint

What We Thought of ChargePoint’s Earnings

We have lowered our fair value estimate for no-moat ChargePoint CHPT to $8 from $11 following the company’s fiscal 2024 second-quarter results. Our valuation cut is driven by a lower revenue outlook, which also results in reduced operating leverage. We view the shares as slightly undervalued in light of our Very High Morningstar Uncertainty Rating.

ChargePoint’s second-quarter results were generally below our expectations. The company’s revenue was toward the low end of its guidance range, while gross margins declined 4 percentage points sequentially to 21% (even when excluding a $28 million inventory impairment). In addition, ChargePoint provided full-year revenue guidance of $620 million (midpoint), which was below our estimate of $721 million.

ChargePoint remains focused on a combination of gross margin improvement and tight operating expense control to achieve positive adjusted EBITDA in the fourth quarter of calendar 2024. We see a combination of product cost improvements as well as a rebound in mix (recovery in high-margin alternating current, or AC, and workplace sales) as keys to near-term gross margin expansion. Regarding operating costs, the company announced a reorganization, resulting in a 10% reduction to its global workforce which is expected to save the company $30 million per year.

ChargePoint ended the quarter with $264 million of cash, down $50 million sequentially. The company plans to utilize a combination of equity issuances via its ATM program and its credit facility to fund near-term operating losses prior to reaching profitability.

We believe ChargePoint is well positioned in the level 2 (AC) charging market but enjoys fewer advantages in the direct current fast-charge segment. We see a relatively balanced risk/reward profile as we await further competitive success in the DC segment and progress toward the company’s profitability goals.

ChargePoint Stock Price

Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Brett Castelli

Equity Analyst
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Brett Castelli is an equity analyst, energy and utilities, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. His coverage focuses on clean energy companies across renewables and emerging technologies.

Before joining Morningstar in 2021, Castelli spent more than eight years in various analyst roles for TortoiseEcofin, a boutique asset manager. His coverage focused on North America and included companies within traditional energy, electric utilities, and renewables. Additionally, he assisted with the firm's environmental, social, and governance efforts and played an important role in integrating ESG into the investment process. Castelli spent a year at the firm's London office following an acquisition.

Castelli holds a bachelor's degree in finance from the University of Missouri's Trulaske College of Business. He also holds the Chartered Financial Analyst® designation.

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