ChargePoint Holdings (NYSE: CHPT) stock leapt 7.8% higher through 9:55 a.m. ET Thursday morning after reporting mixed Q3 earnings last night.
Heading into the report, analysts forecast ChargePoint would lose $0.09 per share on sales of just under $90 million. In fact, ChargePoint beat the sales forecast, reporting $100 million in revenue. However, its loss was twice as big as expected at $0.18 per share.
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Sales declined 10% year over year, with revenue from electric-car charging, in particular, taking a big hit — down 29% year over year. Subscription revenue, by contrast, rose 19%. To mitigate the sales slowdown, ChargePoint cut operating expenses 30%, with the result that the bottom-line net losses were roughly halved year over year.
Per-share net losses declined even more steeply (58% lower than in last year’s Q3). However, this was largely due to the company growing its share count by nearly 16%, spreading out losses among more shares outstanding.
The reason ChargePoint needed to sell more shares is because it’s still burning a cash — lots of it. Cash burn through the first three quarters of this year is now negative $154.4 million — better than the $302.1 million burned a year ago, but still not great and still requiring share sales to generate cash in the absence of positive free cash flow.
So why are investors buying ChargePoint stock today, despite the losses and cash burn? Management has hired a new chief revenue officer “to drive revenue growth,” and revenue was better than expected in Q3.
Still, revenue declined and didn’t grow. And management’s forecast for Q4 revenue, ranging from $95 million to $105 million (so $100 million at the midpoint), looks likely to miss Wall Street targets for $101 million. It would also fall below the $107 million in revenue booked in last year’s Q4.
With revenue still moving in the wrong direction and losses continuing, it’s hard to call ChargePoint stock a buy.
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