Why ChargePoint Stock Is Tumbling Today

ChargePoint Holdings (CHPT -14.82%) Shares fell this morning, falling 23.1% to their lowest trading point by 11:20 a.m. ET Thursday. ChargePoint operates the largest electric vehicle (EV) charging network in the US, but demand has failed to keep up with the company’s expectations. The evidence is in ChargePoint’s latest quarterly figures, released yesterday.

Although ChargePoint’s net loss narrowed in the second quarter, the company’s guidance left investors on edge.

ChargePoint’s revenue continues to decline

Here are some key numbers from ChargePoint’s second quarter earnings report:

• Revenue: Down 28% year-over-year to $108.5 million
• Gross margin: 24% versus 1% in the year-ago quarter
• Net loss: improved to $68.9 million from $125.3 million in the year-ago period

ChargePoint’s gross margin and loss improvement looks impressive. However, management primarily credited the year-over-year comparisons after recording inventory impairment charges in Q2 last year that hit the bottom line.

More importantly, ChargePoint’s top line is still showing no signs of recovery, with revenue from its core network charging systems business falling 44% year-over-year in the second quarter. While subscription revenue rose 21%, it wasn’t enough to offset weak demand for ChargePoint charging systems.

Is there any hope left for ChargePoint stock?

There’s no point in mincing words when it comes to ChargePoint. The truth is, ChargePoint faces a lot of challenges. On the one hand, the demand for electric vehicles has decreased globally, and on the other hand, the competition in charging electric vehicles is heating up.

ChargePoint knows times are tough and needs to save money to slow its cash burn, which is why it also announced plans to lay off 15 percent of its global workforce. With the company also projecting revenue of just $85 million to $95 million for the third quarter — down 18% year-over-year — ChargePoint stock will need a really solid catalyst to come back.