Your job, as an investor, isn’t to be a hero and speculate on poor-performing business. Rather, your goal should be to make money and, just as importantly, not lose money. Just as ChargePoint (NYSE:CHPT) is a money-losing operation, CHPT stock is a wealth burner and will likely continue to disappoint its investors.
ChargePoint, a provider of EV charging stations, is good at certain things. Unfortunately, those things include spending money and selling shares to raise capital. These aren’t positive points for ChargePoint, so prospective investors need to be careful if they’re thinking about being a hero.
CHPT Stock Gets a Quick Bump, Then Continues Its Downtrend
CHPT stock once traded at $46 in 2020, but has halved multiple times since then. Every little bump in the share price was sold off along the way. How much longer will it be before the stock gets cut in half again?
Always remember, even the worst stocks don’t go down in a straight line. ChargePoint shares actually gained value in the first few days of November. That technical bounce didn’t last long, though.
In a high-interest-rate environment, the market doesn’t tolerate money-losing startups like it did in 2020 and 2021. ChargePoint has been consistently unprofitable and posted a wide EPS miss in the company’s most recently reported quarter. ChargePoint’s net earnings loss deepened year-over-year during that quarter.
InvestorPlace contributor Chris MacDonald observed ChargePoint insider selling activity and indicated that CHPT stock might be a potential value trap, meaning it could easily go lower even if the stock looks cheap.
ChargePoint’s Penchant for Spending Money
Prospective investors may have a lot of questions about ChargePoint. One thing that’s known for certain, though, is that ChargePoint isn’t afraid to spend money. Consider this: ChargePoint’s total cost of revenue jumped from $90.139 million in the quarter ending in July of 2022, to $149.369 million in the most recently reported quarter.
Also, The Verge observed ChargePoint is spending millions of dollars to improve the reliability of its EV chargers. This raises the question whether ChargePoint’s chargers have been unreliable up to this point.
Speaking of raising questions, ChargePoint raised the issue of share dilution when the company enacted a capital raise earlier this year. This capital raise involved printing up and selling millions of shares.
How many millions of shares? Reporters with Barron’s did their best to answer that question, stating, “Based on what’s in the company’s filing and recent pricing, perhaps 60 million new shares are in the market. That’s a 17% increase in the stock outstanding.”
Will ChargePoint implement more dilutive capital raises again in the future? It’s entirely possible, and this is a potential pitfall that prospective CHPT stock investors/”heroes” need to consider carefully.
CHPT Stock: Trying to Be a Hero Will Only Get You a Zero
Again, not losing money is just as important as making money, if not more so. ChargePoint and its shareholders have lost money over the long term, and this situation isn’t likely to get better anytime soon.
Sure, CHPT stock will catch small rallies from time to time, but gets still gets an “F” grade. Between the share dilution, the company’s spending habit and the widening earnings loss, there are just too many issues to confidently invest in ChargePoint now.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
