Shares of ChargePoint Holdings (CHPT 3.10%) opened Wednesday on a strong note, trading 8% higher as of 10:30 a.m. ET after surging 12.6% higher earlier in the morning. The electric vehicle charging infrastructure company's earnings release is still some weeks away, but a rival is helping lift investors' hopes in the languishing stock ahead of earnings.
ChargePoint is struggling to grow revenue, but a rival isn't
ChargePoint stock plunged to a 52-week low last month as investors became increasingly wary of the company's ongoing struggles amid a slowing global EV market. ChargePoint also announced a reorganization plan in January, including laying off 12% of its global workforce, that could save it some $33 million in annual operating expenses. With the company reporting a 12% year-over-year drop and a gross margin of negative 22% for its fiscal 2024 third-quarter revenue according to generally accepted accounting principles (GAAP), investors' expectations from ChargePoint have been muted so far.
NYSE: CHPT
Key Data Points
This morning, though, rival Blink Charging (BLNK 6.24%) reported a surprisingly strong set of preliminary numbers for its 2023 fourth quarter and full year, indicating that things may not be as bad for the EV charging industry overall as they appear.
Blink Charging expects its Q4 revenue to surpass $42 million and its full-year revenue to exceed $140 million and beat management's outlook. CEO Brendan Jones called it a record-breaking Q4 and 2023 revenue growth, driven by strong demand for equipment and services. Also, Blink Charging still expects to achieve positive adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) by December 2024, suggesting it continues to see strong growth this year.
Blink Charging's numbers indicate that there's still strong demand for EV charging products, contrary to widespread fears. That bodes well for ChargePoint, which raised concerns about demand when it booked high inventory impairment charges in Q3.
Is this an opportunity to buy ChargePoint stock ahead of earnings?
Much like Blink Charging, ChargePoint expects to achieve positive non-GAAP adjusted EBITDA in the fourth quarter of 2024. In the third quarter, ChargePoint reported a non-GAAP adjusted EBITDA loss of around $97 million, largely because of inventory impairment charges.
A non-GAAP metric shouldn't mean much to investors. What's important is to note that ChargePoint was sitting on surplus inventory until the third quarter, as it overestimated demand for its EV chargers and solutions. ChargePoint is also clearly struggling to grow sales and revenue. Strong numbers from a rival, therefore, in no way suggest that ChargePoint will spring a surprise when it reports its numbers on March 5. In short, buying ChargePoint stock now ahead of earnings looks like a risky bet.
