ChargePoint Holdings (NYSE: CHPT) shares are being taken to the woodshed Friday morning. The stock was down by 36.3% at 10:25 a.m. ET after the company provided a guidance update last night.
Today’s move means shares of the electric vehicle (EV) charging network company are now lower by nearly 80% this year.
With some EV makers throttling back production as the growth in demand for EVs seems to be slowing, it’s not surprising to see ChargePoint also adjust its guidance. But investors didn’t expect to hear what the company released last night. Not only did it adjust revenue guidance to predict a year-over-year decline in the current quarterly period, it also is replacing both its CEO and chief financial officer (CFO).
ChargePoint lowered revenue guidance for its fiscal 2024 third-quarter period ended Oct. 31, 2023. The midpoint of its prior estimate was $157.5 million. Now the company sees revenue of between $108 million and $113 million. It is also taking a noncash impairment charge of $42 million for which it will provide more detail when it issues its full report on Dec. 6. As if that were not enough bad news, ChargePoint also said it is immediately replacing its CEO with Rick Wilmer, who had been chief operating officer since July 2022. Its CFO also left the company and an interim CFO was announced.
Investors have been watching ChargePoint’s revenue grow sharply in recent years. While that hasn’t led to profitability yet, it was the core reason to believe profitability could eventually come. But the new revenue guidance represents a drop year over year. That’s a major change and helps to explain the drastic management changes.
Yet the business also faces more headwinds than ever. Not only has EV demand growth slowed, ChargePoint is facing a new major competitor in EV giant Tesla. This week, Tesla announced its second deal within a month to sell its ultra-fast charging equipment directly to a third party.
Tesla is now a direct competitor to ChargePoint, and that could be difficult to overcome. Investors were right to unload ChargePoint shares on the news today.
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Howard Smith has positions in ChargePoint and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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