ChargePoint stock price analysis: Don’t buy the CHPT dip yet

ChargePoint (NASDAQ: CHPT) stock price nosedived on Thursday as investors reflected on the company’s earnings. The shares plunged by more than 17% and reached the lowest level on record. In all, the stock has slipped by more than 88% from its all-time high.

Growth concerns continue

ChargePoint is a leading player in the green transition industry. It operates one of the biggest electric vehicle charging infrastructure networks in the United States and some European countries.

Despite this, the company is facing numerous challenges after Tesla opened its network to companies like Ford and General Motors. Despite this, analysts believe that the company’s demand will continue for a while.

The company published relatively mixed earnings on Wednesday. Its revenue jumped to $150 million, between the guidance of between $148 million and $158 million. Most of this revenue was driven by the 76% increase of its network charging systems. Its subscription revenue rose to $18 million.

There are three main reasons why the ChargePoint stock price tumbled. First, the company’s margins continued thinning in the second quarter. Its gross margin was 3% because of a $28 million impairment charge.

Second, the company continued to offer stock-based compensation (SBC). This amount jumped from $24 million in the first quarter to $35 million in Q2. SBC tends to dilute existing shareholders.

Finally, ChargePoint’s guidance was softer than expected. It expects its Q3 revenue to be between $150 million and $165 million. It sees its gross margin coming at 22% to 25%. For the year, ChargePoint expects its revenue to be between $605 million and $630 million. Again, this guidance was weaker than expected.

So, is this ChargePoint stock price dip a good buy? ChargePoint has become an incredibly cheap stock with a market cap of over $2 billion. Despite this, I believe that it could be a value trap for now because of its high losses. It had an EBITDA loss of over $53 million in the quarter.

In the long term, however, I believe that ChargePoint will bounce back as demand for charging rises. I also believe that it could turn to be an acquisition target by an oil and gas company if it addresses its profitability.

ChargePoint stock price forecast

The daily chart shows that the CHPT share price has been in a deep sell-off after peaking at $49.60 in 2021. It recently dropped below the key support levels at $8.01 (December 28 low) and $7.21 (June 23rd low). The shares have dropped below all moving averages, pointing to more downside.

Therefore, the outlook for the stock is bearish, with the next important level to watch being at $4. In the long term, I see a situation where it rebounds and retests the resistance at $7.20. This view is in line with my last ChargePoint outlook.