Without a doubt, electric vehicle charging station manufacturer ChargePoint (NYSE:CHPT) has disappointed many investors in 2023. CHPT stock has been a poor performer this year, and prudent traders should cut their losses and move on.
If you’re not convinced of this, wait until you get the details of ChargePoint’s recent capital-raising efforts. Sure, ChargePoint’s management might try to convince investors that a huge share sale is a good thing for the company. But if your instincts tell you that something’s not right, then it’s probably not a great idea to invest in ChargePoint.
CHPT Stock’s Relentless Decline in 2023
CHPT stock got a quick jolt in January and February to the $13 level, but it was all downhill from there. Recently, the stock dropped to just $3 and change.
Clearly, plenty of people are dumping their ChargePoint shares, including some insiders at the company. Reportedly, as of Sept. 13, ChargePoint Director Michael Linse sold 8,857,824 shares of the company in the past 12 months. Also during that time frame, Chief Financial Officer Rex Jackson reportedly sold 615,842 ChargePoint shares.
Remember, ChargePoint is an unprofitable business that missed Wall Street’s revenue and earnings forecasts in 2023’s second quarter. Furthermore, ChargePoint’s third-quarter sales guidance fell short of the analysts’ consensus estimate.
ChargePoint CEO Pasquale Romano confidently declared that his company was “well-positioned and well-capitalized for the future.” Should cautious investors believe this statement, though?
ChargePoint’s Credibility Problem
In a time of high interest rates and recession worries, many investors are shying away from unprofitable startups like ChargePoint. Amid this worrisome backdrop, ChargePoint’s credibility is of paramount importance.
Yet, ChargePoint may suffer from a credibility problem after Romano’s aforementioned “well-capitalized” claim. If ChargePoint is so well-capitalized, then the company shouldn’t need to sell a large quantity of shares – right?
The problem is, ChargePoint looks desperate to raise capital as the company is raising $232 million by issuing and selling stock shares. ChargePoint’s press release attempted to spin this as a positive development, but the market responded by sending CHPT stock lower.
Thus, the market wasn’t persuaded by ChargePoint’s optimistic-sounding press release. Investors had concerns about share-value dilution, naturally, but there’s another issue here. Romano’s “well-capitalized” claim doesn’t seem credible now.
Plus, there may be a transparency problem. ChargePoint’s press release didn’t specify the total number of shares that the company is selling. This is something that informed investors should want to know.
CHPT Stock: Frustration and Disappointment
As we’ve learned, ChargePoint is issuing and selling a large but unspecified number of shares to raise money. This doesn’t seem to jibe with Romano’s claim that ChargePoint is “well-capitalized.”
Moreover, ChargePoint remains unprofitable and some insider share selling has been reported. So, overall, the outlook for CHPT stock is bleak and we’re assigning it an “F” grade.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
