ChargePoint Can Optimize Operations with AI and ML Implementation

Key Points

• ChargePoint is the largest EV charging station network in the United States, with over 31,000 charging stations and 56,000 ports.
• The implementation of artificial intelligence (AI) and machine learning (ML) algorithms enables ChargePoint to incorporate dynamic pricing, predict friction points, create personalized charging incentives and recommendations, and spot new locations for future stations.
• The EV slowdown has depressed shares of ChargePoint heading into its Q1 2024 earnings.

ChargePoint Holdings Inc. NYSE: CHPT is a leading electric vehicle (EV) charging infrastructure company. With over 31,000 EV charging stations and 56,000 ports, ChargePoint is the country's largest EV charging network. It is a key player in enabling the widespread adoption of EVs and electrification and helping to combat range anxiety, which is the fear of running out of electricity during a trip and being stranded.

ChargePoint operates in the auto/tires/trucks sector with Tesla Inc. (NASDAQ: TSLA) supercharger network, Beam Global NASDAQ: BEEM, and Blink Charging NASDAQ: BLNK.

How ChargePoint Uses AI to Revolutionize EV Charging

ChargePoint implements artificial intelligence (AI) driven analysis to streamline problem-solving, identify issues, and alleviate friction points with its charging network operations. It can analyze charging patterns efficiently, offer personalized charging recommendations and incentives using machine learning (ML) algorithms, and apply predictive analysis for future user charging behavior.

Eventually, it could apply dynamic charging pricing to synergize with station traffic patterns. It has already partnered with AI leader Stem to help support and improve the availability of EV charging stations across United States highways. 

EV Slowdown: Impact on ChargePoint from Maintenance and Depreciation

Sales of EVs are seeing a slowdown as evidenced by softening demand from manufacturers. General Motors Co. NYSE: GM and Ford Motor Co. NYSE: F have both announced they would be scaling back on EV spending. Ford will delay $12 billion in EV investments and GM will no longer provide EV production targets so market demand can rebuild.

Range anxiety, charging, expensive repairs, and maintenance are all issues impacting demand. EV owners have been vocal about their need to replace EV tires after 10,000 miles compared to 20,000 to 40,000 for gas-powered cars due to the extra weight of the EV batteries. Rental car dealer Hertz Global Co. NASDAQ: HTZ has decided to unload 30,000 EVs due to expensive maintenance costs and depreciation as rideshare drivers run them into the ground before resale. The slowdown can negatively impact ChargePoint’s business.

CHPT Stock on the Verge of a Cup and Handle Pattern

The daily CHPT candlestick chart illustrates an attempt to complete a cup and handle pattern. The cup lip line formed at $1.93 on April 9, 2024, before plunging to a low of $1.22. Shares rallied back up to retest the cup lip line on May 15, 2024, before pulling back to form a handle at $1.63. If CHPT can rally through the $1.93 cup lip line on earnings, then a cup and handle breakout can trigger. Otherwise, a retest of the low at $1.22 is possible. The daily relative strength index (RSI) is chopping around the 49-band. Pullback support levels are at $1.52, $1.22, $1.02, and $0.85.   

ChargePoint's Momentum Loses Steam in Fiscal Q4 2024

On March 5, 2024, ChargePoint reported a fiscal Q4 2024 GAAP EPS loss of 23 cents. Revenues dropped 24.2% YoY to $115.83 million, missing $119.79 million consensus estimates. Network charging systems revenue plunged 39% YoY to $74 million, while subscription revenue climbed 30% to $25.7 million. Non-GAAP gross margin was 22% versus 23% in the quarter of last year. The company recorded a non-GAAP adjusted EBITDA loss of $45.3 million versus $42.1 million in the year-ago period. The company closed the quarter with a cash balance of $457.8 million with an unspent $150 million revolving credit facility.

ChargePoint's Strategy Amidst Slower-Than-Expected EV Growth

ChargePoint CEO Rick Wilmer commented, "In summary, ChargePoint made incremental progress in the fourth quarter. We have a revised strategy for the road ahead, and we remain committed to the goal of becoming profitable on an adjusted EBITDA basis in the fourth quarter of this year.

Wilmer concluded, “To give market context for the strategy we will be outlining shortly, I'd like to report what we see in terms of EV adoption. Based on the latest sales reports, EV growth continues at a double-digit pace, but not at the aggressive rate OEMs had expected.”

ChargePoint is Bracing for Weakness

ChargePoint issued downside guidance for fiscal Q1 2025 with revenues expected between $100 million to $110 million versus $126.61 million consensus analyst estimates. The company anticipated Q4 of fiscal 2025 ending January 2025 to achieve positive non-GAAP adjusted EBITDA. ChargePoint reported its fiscal Q1 2025 earnings report after the market close on January 5, 2024.

ChargePoint analyst ratings and price targets are on MarketBeat.