ChargePoint stock price: the plot thickens as CHPT shares eye $1

ChargePoint (NYSE: CHPT) stock price made a strong bearish breakout as concerns about the company continued. The shares crashed to a low of $2.20 in the extended hours, the lowest level on record. They have fallen by over 83% from the highest point this year and by 95% from the all-time high. Its market cap has dropped from an all-time high of over $11.8 billion to $780 million.

Charging infrastructure woes continue

The electric vehicle (EV) industry is going through major headwinds as its growth slows. Recently, we have seen companies like General Motors, Ford, and Stellantis have pared back their EV ambitions.

While EVs have improved a lot, consumers are still worried about their high costs and charging infrastructure. At the same time, there are concerns about the reliability of charging stations by companies like ChargePoint, EVGo, and Blink Charging. This explains why their stocks have plunged as I wrote in this report.

ChargePoint share price continued its sell-off after the company published weak preliminary results and replaced its CEO. Its third-quarter revenue came short of expectations. 

It expects to report revenues of between $108 million and $113 million, lower than the expected $150 and $165 million. Also, it expects to make a non-cash impairment charge of $42 million and that its operating expenses will be between $80 million and $82 million

As a result, the company decided to replace its CEO, Pasquale Romano with Rick Wilmer. The Chief Financial Officer, Rex Jackson also left the firm. In a statement, the company said:

“Overall macroeconomic conditions, along with fleet and commercial vehicle delivery delays impacted anticipated deployments with government, auto dealership and workplace customers.”

Weaker revenue guidance and executives departing is always a red flag to investors. It simply implies that the company is not doing well. It also means that the situation is worse than what Wall Street expects.

The other challenge for ChargePoint is that it will need to raise additional capital in the next few months. It has over $397 million in cash, cash equivalents, and restricted cash. While these funds are not little, the company is still burning a lot of cash every quarter. 

Another cash raise will continue the dilution we have seen in the past few years. In October, the company raised $232 million by selling shares. As a result, total outstanding shares have jumped from 305 million in May 2021 to over 360 million today.

ChargePoint stock price forecast

I have warned about CHPT stock several times as you can read here, here, and here. My main argument is that the company is in a competitive industry, is burning cash, and will have to deal with charging reliability.

Turning to the daily chart, we see that the stock has crashed hard in the past few months. This sell-off intensified after revealing the departure of the CEO and CFO. It has crashed below all moving averages while the Average Directional Index (ADX) has drifted downwards.

I suspect that the ChargePoint share price will continue falling as sellers target the key support at $1.