Shares of electric vehicle (EV) infrastructure company ChargePoint Holdings (CHPT) have significantly underperformed the broader market. ChargePoint shares have plummeted approximately 39% year-to-date and a staggering 88% over the past two years. Given this massive decline, CHPT is now in penny stock territory.
The company’s struggles stem from an inability to fully take advantage of growing EV adoption. Declining revenues and intense competition in EV charging have further dampened investor confidence.
However, ChargePoint’s fiscal Q3 2025 financial results offered a glimmer of hope. Although revenue of $99.6 million dropped nearly 10% year-over-year, it exceeded Wall Street expectations of $89.6 million. The adjusted gross margin held steady at 26% compared to the previous quarter. Furthermore, the company’s Q4 revenue guidance of between $95 million and $105 million aligned closely with analysts’ forecasts.
What truly caught investors' attention was management’s optimistic outlook. Despite ongoing challenges, leadership pointed to several promising indicators that signal a potential return to long-term revenue growth.
The market responded positively to this upbeat narrative, with CHPT shares up more than 16% in intraday trading on Dec. 5.
With this backdrop, should investors take a second look?
ChargePoint's Positives: Growth and Strategic Execution
ChargePoint has shown promising signs of growth and strategic execution, underpinned by increasing demand for EV infrastructure:
- Growing Utilization and Infrastructure Needs: Demand for EV charging infrastructure continues to rise, with charging network operators reporting increased utilization. ChargePoint’s third-quarter results revealed utilization growth surpassing port additions, highlighting the need for expanded infrastructure. This demand has spurred inquiries from customers about adding more chargers, reflecting optimism in the broader industry.
- Impressive Expansion: ChargePoint's managed port count now exceeds 329,000, representing year-over-year growth of 20%. Notably, 80% of the Fortune 50 are ChargePoint customers, a testament to the company’s strong market presence.
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Strategic Plan Milestones : ChargePoint has made progress on its three-year strategic plan, which it introduced in the prior quarter.
- Year 1: The company finalized its leadership team and restructured operations, achieving operational excellence goals earlier than expected. A new chief revenue officer (CRO), David Vice, was brought on board to align the sales organization for growth.
- Year 2: Next-generation software and hardware rollout is on track. This software aims to consolidate top-tier features, enabling customers to manage everything from charger networks to corporate fleets seamlessly. Next-generation hardware is expected to improve cost efficiency, accelerate market entry, and enhance margins.
- Year 3: The company anticipates the full realization of its strategic initiatives, aiming to deliver a class-leading portfolio of software and hardware solutions while achieving operational excellence.
- Financial Discipline: ChargePoint has focused on controlling costs while driving revenue. The benefits of its recent restructuring are beginning to materialize, with a 64% reduction in net cash consumption in Q3 compared to Q1.
ChargePoint's Challenges: Headwinds in Demand and Profitability
Despite its strengths, ChargePoint faces significant hurdles:
- Softening EV Demand: While global EV adoption continues to expand, demand has slowed. This, coupled with increasing competition in the EV charging market, has created headwinds for ChargePoint. Although EV adoption has outpaced the installation of charging infrastructure, this hasn’t translated into a surge in equipment sales. Hesitation among major customers to invest in additional hardware has further impacted CHPT’s performance.
- Profitability Delays: Profitability remains elusive. Its timeline to achieve profitability was pushed back due to a weaker-than-expected macroeconomic environment. Margins are also under pressure, with improvements dependent on a shift in product mix and cost efficiencies, which are not expected in the near future.
- Regulatory Uncertainty: The regulatory environment poses another challenge. The potential removal of the $7,500 EV tax credit in the U.S. could slow EV demand in the long term. While short-term incentives might create a temporary boost, sustained growth is less certain, leaving ChargePoint vulnerable to policy shifts that are beyond its control.
- Inventory and Cash Flow Challenges: ChargePoint is grappling with legacy inventory issues, which have delayed the anticipated benefits of its lower-cost manufacturing facilities in Asia. These advantages are unlikely to materialize until at least the latter half of next year. On the cash flow front, the company has shown progress in management, but profitability remains a pressing concern, particularly as economic uncertainties persist.
The Bottom Line on CHPT
ChargePoint’s growth prospects are bolstered by expected shipments of large fleets and commercial deals in 2025, including projects in the e-bus and government sectors. Subscription revenue from its expanding customer base also provides a stable growth driver. However, profitability hinges on cost optimization, improved margins, and operational efficiency.
While the long-term opportunity in the rapidly expanding EV charging market is compelling, near-term headwinds have made analysts cautious. Wall Street currently rates the stock as a "Hold," reflecting a wait-and-see approach.
