ChargePoint Holdings (CHPT 8.61%) 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.
ChargePoint Q3 earnings
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.
Is ChargePoint stock a buy?
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.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
