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ChargePoint Holdings (CHPT), a key player in the electric vehicle (EV) charging infrastructure sector, has had a rough year. The stock has plunged about 50% in 2024, significantly underperforming the S&P 500 ($SPX), which gained around 23%.
Further, ChargePoint’s value has fallen nearly 94% over the past three years as the company battles heightened competition, shrinking revenue, and regulatory hurdles. Despite these challenges, recent developments offer a glimmer of hope for this penny stock.
A Strategic Partnership with GM
One of ChargePoint's promising developments is its new partnership with General Motors (GM). The two companies have joined forces to accelerate the installation of ultra-fast EV chargers across the U.S., with plans to deploy hundreds of new chargers in key locations over the next year.
These chargers will feature ChargePoint’s Omni Port system, which is compatible with both the Combined Charging System (CCS) and North American Charging Standard (NACS).
This strategic alliance aims to improve EV charging reliability and convenience, ultimately driving the adoption of electric vehicles. For ChargePoint, the partnership boosts its infrastructure and potentially increases its revenue as more chargers go online.
Positive Indicators for Future Growth
While ChargePoint has struggled with revenue growth, there are signs that the EV charging market is heating up. In a recent earnings call, management highlighted an increase in charger utilization across the industry, which is good news for ChargePoint, as it supplies hardware and software for many of these networks. The demand for more charging infrastructure is evident through the increase in ChargePoint’s managed port count, which exceeded 329,000 in the third quarter, up 20% year-over-year.
Furthermore, ChargePoint is focusing on expanding its offerings with next-generation software and hardware. The new software platform will allow customers to manage everything from individual chargers to entire fleets of EVs, enhancing ChargePoint’s appeal to businesses and fleet operators. The company is also refining its hardware products to be more cost-effective, with an emphasis on faster market entry and improved margins.
ChargePoint’s Focus on Profitability
ChargePoint is focusing on improving revenue and taking steps to reduce its cost structure. Thanks to its efforts, the company has reported improved adjusted EBITDA each quarter in 2024 while also lowering its cash usage.
ChargePoint reduced net cash consumption to $24 million in Q3, down 64% from Q1 of this year and lower than its adjusted EBITDA loss for the third quarter. This operational efficiency should help ChargePoint continue to make progress toward profitability, a critical milestone for restoring investor confidence.
Risks and Challenges Ahead for CHPT
Despite these positive developments, ChargePoint faces several headwinds that could continue to impact its stock price. Increased competition in the EV charging market and reluctance from major customers to invest in additional hardware has put pressure on the company.
While it’s working on lowering costs, ChargePoint is still not profitable, and a prolonged cash burn could weigh on its stock price.
Additionally, changes in government policies could hurt EV adoption. For instance, if President-elect Donald Trump removes or reduces the $7,500 EV tax credit, it could dampen demand for electric vehicles, ultimately affecting the need for charging infrastructure.
The Bottom Line on ChargePoint Stock
Wall Street remains sidelined on ChargePoint stock, with analysts maintaining a “Hold” given the company’s declining revenues and increased competition.
However, ChargePoint is showing signs of improvement. One key driver of optimism is ChargePoint’s ability to close deals that had been delayed earlier this year. The company is finalizing these postponed agreements and receiving positive signals about potential expansions, signaling demand across its markets.
ChargePoint has secured significant contracts on the fleet side, particularly in the electric bus segment. These contracts are slated for delivery next year, adding to the company’s projected revenue growth. Similarly, on the commercial front, ChargePoint has booked deals with government entities, including the U.S. Navy, and has won contracts with auto dealerships—all set to contribute to its 2024 performance.
Residential charging remains another bright spot for ChargePoint. The company has forecast growth in volumes through its channel partners, reflecting continued strength in this segment. Additionally, ChargePoint is benefiting from a steady increase in subscription-based revenue, which provides a reliable income stream.
The diverse revenue sources and a favorable outlook for the EV charging industry position ChargePoint for meaningful growth in 2025. Further, the company is lowering costs and improving margins, likely supporting its bottom line and leading to a recovery in this penny stock.
