Capping off what has been an ugly time broadly for the electric vehicle (EV) industry this week, charging infrastructure specialist ChargePoint (NYSE:CHPT) is suffering a hideous 35% collapse on Friday. Yesterday after the market close, management announced a sudden shift at ChargePoint’s top executive levels. Taking that along with a revenue downgrade, investors have now decided to rush for the exits, sparking a sour analyst assessment over CHPT stock.
According to Bloomberg, ChargePoint announced Thursday afternoon that it had replaced CEO Pasquale Romano and Chief Financial Officer Rex Jackson. Notably, Romano had served at the helm of the company since 2011. Per MarketWatch, Rick Wilmer has now stepped into the CEO role. Still, the sudden and dramatic shift in leadership is failing to quell rising concerns about the viability of CHPT stock.
“Overall macroeconomic conditions, along with fleet- and commercial-vehicle delivery delays, impacted anticipated deployments with government, auto dealership and workplace customers,” said Wilmer.
Adding to the misery, ChargePoint — which provides EV charging station networks — stated that its upcoming third-quarter revenue tally would land between $108 million and $113 million. That’s well short of the previous guidance calling for between $150 million and $165 million. Analysts surveyed by FactSet anticipate Q3 sales of $157 million as well.
ChargePoint will report Q3 earnings and update its guidance for the current quarter and year on Dec. 6.
Analysts Blast CHPT Stock
Given the scope and deeply negative implications of the organizational shift and financial update, analysts are predictably blasting CHPT stock. “Big changes we did not see coming,” said TD Cowen analyst Gabe Daoud. “The EV charging space has endured significant headwinds this year — evidenced by recent weak prints from other hardware/network providers — and despite being a leader CHPT is not immune.”
Roth MKM analysts went further, downgrading CHPT stock to “neutral” due to the pre-earnings announcement, which broadcasted “material deterioration.” Roth MKM also warned that ChargePoint’s recent capital raise may not be enough to support the firm’s projected pathway to profitability.
As Bloomberg notes, EV infrastructure companies are fundamentally struggling to compete with Tesla (NASDAQ:TSLA) in the United States. With the EV pioneer building out a “vast network of plugs with a different connector design than the rest of the industry,” the move has practically forced major automakers to switch to Tesla’s connector as the “new North American standard.”
Unfortunately, that puts companies like ChargePoint in a bind. At the same time, though, rival EVgo (NASDAQ:EVGO) provides a sharp contrast to CHPT. EVgo posted stronger-than-expected sales for its Q3 report, naturally pouring salt on CHPT stock’s wounds.
Why It Matters
At the moment, TipRanks shows that the consensus view of CHPT stock among analysts remains a moderate buy. However, this is a relatively split assessment, breaking down as 10 buy ratings and seven holds. Further, while the average price target for shares stands at $7.20 — implying over 250% upside –many of the individual analyst price forecasts are from before today’s CHPT implosion.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
