Should You Buy ChargePoint While It's Trading Below $1?

ChargePoint's stock is underperforming due to headwinds facing the EV industry, including rising EV prices, tariffs, and unfavorable political conditions potentially rolling back EV tax credits. The company's fiscal year 2025 sales dropped 18% to $417 million, with networked charging system sales declining 35%, and the company reported a non-GAAP net loss of $159 million; analysts suggest avoiding the stock despite its low price-to-sales ratio of 0.75, citing significant obstacles to achieving market-beating returns.

Analysis

ChargePoint (CHPT) faces significant challenges, underscored by a 60% decline in its share price over the past year, pushing it below $1. The company's struggles are compounded by broader electric vehicle (EV) industry headwinds, including high EV prices—averaging $59,200 in April, up nearly 4% year-over-year and 23% above gasoline vehicles—which are contributing to slower-than-anticipated EV adoption rates in the U.S. (8.1% of vehicle sales last year, a modest increase from 7.8% in 2023). ChargePoint's heavy reliance on the U.S. market makes it particularly vulnerable to these adoption trends. Furthermore, the political and regulatory environment presents substantial risks; tariffs on automotive imports are increasing production costs for EV makers like Rivian and Lucid, leading major automakers such as Ford, Stellantis, and General Motors to withdraw their 2025 guidance due to this uncertainty. A proposed bill to roll back EV tax credits, currently worth up to $7,500, adds another layer of concern. Internally, ChargePoint's performance is deteriorating, with fiscal 2025 sales falling 18% to $417 million, primarily driven by a 35% drop in its largest segment, networked charging system sales, despite a 20% increase in subscription revenue. Management's guidance for Q1 2026 projects a further sales decline, with an estimated $100 million at the midpoint, nearly 7% lower than the prior year. Although the company narrowed its non-GAAP net loss to $159 million in fiscal 2025 from $297 million in 2024, declining sales will make continued loss reduction difficult. The stock's price-to-sales multiple of 0.75 indicates it is 'cheap,' but this valuation does not necessarily represent good value given the confluence of external pressures and internal operational difficulties.

Key Decisions for Investors

• Given the significant external headwinds from high EV prices, tariff uncertainties, potential EV credit rollbacks, and ChargePoint's internal challenges including declining sales and persistent unprofitability, investors should exercise extreme caution and consider avoiding or reducing exposure to CHPT stock.
• Monitor key EV industry indicators such as U.S. EV adoption rates, average transaction prices for EVs, developments regarding automotive tariffs, and legislative outcomes concerning EV tax credits, as these factors will critically impact ChargePoint's operating environment.
• Closely scrutinize ChargePoint's upcoming financial reports for any signs of a turnaround in its core networked charging system sales, improvements in overall revenue trends, and a sustainable path to profitability before considering any investment.