Is ChargePoint Stock Headed to $1 After Revenue Warning Sinks Shares?

The past year has not been a good one for ChargePoint (CHPT -2.29%) and it only got worse after the electric vehicle (EV) charging solutions company reported weak fiscal second-quarter results and moved back its profitability forecast. With things looking dour for the company, let's take a closer look at its results and see if the stock is heading to $1 or if a rebound is in sight. Declining revenue Declining revenue has been a big issue for ChargePoint recently, with the company seeing sizable revenue declines the past four quarters. For its second quarter of fiscal year 2025, ended July 31, its revenue sank 28% to $150.5 million. Networked charging systems revenue was the big negative driver, plunging 44% to $64.1 million. Subscription revenue, on the other hand, rose 21% to $30 million. The former is the charging hardware the company sells, while the latter is a subscription the company sells that lets commercial and fleet customers manage their charging stations, including setting prices and managing energy. The company blamed a number of fleet deals getting delayed due to issues such as delayed permitting as the reason it missed the high end of its revenue guidance. On the positive side, the company's subscription revenue comes at much higher margins, which led to a nice improvement in gross margin. When taking out a $28 million inventory impairment charge last year, gross margin would have risen from 19.3% (1% after the charge) to 23.5%. ChargePoint also nicely reduced its operating expenses, cutting them by 29% to $88.3 million. Together, this helped the company reduce its losses as well. Its adjusted loss was cut in half from $86.1 million to $43 million, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved to a loss of $34.1 million from $81.2 million a year ago. The company ended the quarter with $228.5 million in inventory, which was up from $198.6 million at the start of its fiscal year ended in January. Given its big decline in sales, that's not a great sign and could lead to future write-downs. Through the first six months of its fiscal year, ChargePoint has seen operating cash outflows of $113.7 million, and negative free cash flow of $121 million. It ended the period with $243.7 million in cash and equivalents and $285.7 million in debt. In order to continue to improve its cost structure, the company announced it will reduce its workforce by 15%. The reorganization is expected to result in $10 million in charges, largely from severance pay, but save the company between $38 million and $41 million a year in operating expenses. ChargePoint forecast fiscal Q3 revenue to be between $85 million and $95 million, compared to the $110.3 million in revenue it generated a year ago. That would be about an 18% decline at the midpoint. Meanwhile, it moved back its goal of reaching positive adjusted EBITDA from this fiscal year (2025) to fiscal year 2026. Management said it would need a "moderate" amount of revenue growth next year to achieve this goal. Meanwhile, it said it is looking toward significant cash flow in fiscal 2027. Image source: Getty Images. Is the stock headed to $1 or is this a buying opportunity? ChargePoint is only about another 25% decline from hitting $1, so it would certainly not be a huge stretch to see the stock hit that price. However, despite its low stock price, the company still has a market cap of about $600 million. The company has been struggling mightily with continued revenue declines. Consumer interest in EVs has certainly begun to wane. While EV sales are still growing, growth slowed to 11% in Q2. However, that growth was helped by some heavy discounting. If automakers cannot turn a profit on EV sales, eventually they will turn away from EVs and toward vehicles they can make a profit on. Demand for hybrids, including plug-in hybrids, has been growing strongly. However, regular hybrids use regenerative breaking to charge and don't need charging equipment. This is the larger and faster-growing part of the hybrid market. Against this backdrop, it appears companies are reluctant to invest heavily in charging infrastructure. Meanwhile, with sales projected to heavily fall for the fifth straight quarter, it is difficult to trust ChargePoint at this point. While there are some positives, its declining sales along with negative cash flow and net debt on its balance sheet make an investment in the company a risky proposition. At this point, it appears the company is more focused on surviving than thriving. If the company turns in another poor earnings report, ChargePoint's stock is likely headed to $1.