ChargePoint Holdings Sees Stock Soar Despite Mixed Earnings Report
A Surprise Boost in Revenue
ChargePoint Holdings (NYSE: CHPT) saw its stock jump 7.8% on Thursday morning, despite reporting mixed Q3 earnings the night before. Analysts had predicted a loss of $0.09 per share on sales of around $90 million. While the company did beat sales forecasts with $100 million in revenue, its loss was significantly higher than expected at $0.18 per share.
A Tale of Two Revenues
Revenue from electric-car charging took a significant hit, declining 29% year over year. On the other hand, subscription revenue rose 19%. To mitigate the sales slowdown, ChargePoint cut operating expenses by 30%, resulting in a significant reduction in net losses. Per-share net losses declined even more steeply, down 58% from last year’s Q3.
The Cash Burn Continues
However, the company is still burning through cash at an alarming rate. With a cash burn of negative $154.4 million through the first three quarters of this year, ChargePoint is still reliant on share sales to generate cash. This is a far cry from the positive free cash flow investors would like to see.
A Glimmer of Hope
So why are investors buying ChargePoint stock today? The company has hired a new chief revenue officer to drive revenue growth, and revenue was better than expected in Q3. While revenue declined overall, management’s forecast for Q4 revenue looks promising, ranging from $95 million to $105 million.
A Cautionary Note
Despite the surge in stock price, it’s hard to call ChargePoint a buy. Revenue is still moving in the wrong direction, and losses continue to mount. Investors would do well to exercise caution before investing in ChargePoint.
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