ChargePoint Changes Strategy for Profitability, But Is It Worth Buying Its Shares?

Investors were initially fooled by the hype surrounding Charging point (CHPT -3.52%) and other charging infrastructure companies. It was a logical direction to take, as the electric vehicle (EV) industry was poised to boom in the coming years. In fact, some of the biggest concerns that potential EV customers face are range anxiety and charging infrastructure availability, issues that ChargePoint can help solve.

Despite the growing electric vehicle market — even if it’s slower than expected — ChargePoint has struggled to deliver revenue growth for investors. But after its recent shift from growth to profitability, can the company turn its business around and reward investors?

Bad news

One bad sign for charging infrastructure startups is that while many EV startups are grappling with brutal cash burn as they scale, fewer are seeing revenue declines. ChargePoint’s first quarter of fiscal 2025 saw revenue decline 18%, from $130 million a year earlier to $107 million. Management also lowered its second-quarter revenue guidance from a range of $150 million to $165 million to a range of $108 million to $113 million.

What’s more, the company ended the first quarter of fiscal 2025 with just $262 million in cash and cash equivalents, and has increased its outstanding shares by more than 30% over the past three years. If it needs to raise more capital, investors could be diluted even further.

As the broader U.S. electric vehicle market slows, at least temporarily, ChargePoint will continue to struggle with revenue growth for the foreseeable future. However, management is shifting strategy to focus on profitability rather than more expensive growth.

Software vs. Hardware

Recently, management decided to focus on software development, which makes sense because it brings higher profit margins and recurring revenue. The company has announced several partnerships for its hardware to help bring products to market faster and cheaper.

One partnership that will help ChargePoint achieve better results is a joint development agreement for electric vehicle charging solutions with AcBel, a leading power supply manufacturer within Kinpo Group. This agreement should improve ChargePoint’s R&D capabilities, reduce costs and bring more innovative products and solutions to market faster.

Another partnership that should benefit investors was LG Electronics. Both companies are targeting commercial charging solutions, with deliveries expected to begin this summer. Essentially, the agreement calls for ChargePoint to operate LG’s charging stations using its software, and ChargePoint users to benefit from LG’s high-quality EV chargers, while the company currently doesn’t offer hardware solutions.

Are these shares worth buying?

ChargePoint is poised to benefit from the new focus on software, with software as a service (SaaS) for commercial and fleet products. In fact, according to ChargePoint’s investor presentation, the company works with 74% of the Fortune 50, and revenue from its largest customers continues to grow organically.

Image source: ChargePoint investor presentation.

Finally, with a focus on software and profitability over growth, management expects to generate positive adjusted EBITDA in the fourth quarter of fiscal 2025. That would be a big step for the company to prove to investors that it has a long-term path to returning value to shareholders. For investors willing to accept the risk of a cash-burning startup, ChargePoint offers a cheaper entry point — it has lost more than 90% of its value over the past three years — into an electric vehicle market that appears destined for continued growth.