ChargePoint faces 'painful transition' after major changes, analyst warns

By Steve Gelsi and Tomi Kilgore

Downgrade comes as stock falls sharply on heavy volume.

ChargePoint Holdings Inc. drew a downgrade at Oppenheimer, while analysts at Needham slashed their price target for the electric-vehicle-charging company in half on Friday.

ChargePoint's stock (CHP) plunged 36.4% after the company said it would fall short of analyst estimates and announced the departure of Pasquale Romano, who had been chief executive for 12 years.

The company named Rick Wilmer its new chief executive officer and named Mansi Khetani as its interim financial chief to replace the departing Rex Jackson.

The morning volume of 40.2 million shares was more than twice the stock's average daily volume of 15 million shares.

Oppenheimer cut its rating on ChargePoint to perform from outperform and removed its $13 price target for the stock.

"We are stepping to the sidelines...given the management transition, choppy demand, and potential for further organizational changes," said Oppenheimer analyst Colin Rusch.

ChargePoint appears to be poised to go through a "painful transition" as it continues to target breakeven earnings before interest, taxes, depreciation and amortization (Ebitda) by the end of fiscal year 2025, Rusch said.

"We would not be surprised by deeper cuts in operating expenditures given the potential for revenue growth to be slower than previously expected," he said.

Oppenheimer analysts remained encouraged by ChargePoing's $397 million cash and $150 million in an undrawn revolver, which they believe will allow them to reach positive adjusted Ebitda.

Meanwhile, Needham analyst Chris Pierce on Friday cut his price target on ChargePoint to $4 from $8, noting that ChargePoint continues to see order delays due to economic uncertainty.

"We are still believers in EV adoption at the consumer and fleet levels given government incentives and the lower total cost of ownership...with near term weakness pushing out growth in our model," Pierce said, while keeping a buy rating on the stock.

ChargePoint's stock was also headed for the biggest one-day drop since it started trading four years ago, with the percentage decline more than double the current record 16.1% selloff on June 13, 2022.

The stock's weekly decline of 26.6% would also be a new record, passing the current record of a 23.1% drop during the week ended Sept. 8, 2023.

The stock has plummeted 79.1% year to date, while shares of rival Blink Charging Co. (BLNK) have dropped by 66%. Blink's stock was down by nearly 10% on Friday.

The Nasdaq COMP is up by 34.7% in 2023, while the S&P 500 SPX had advanced by 17.4%.

-Steve Gelsi -Tomi Kilgore

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11-17-23 1133ET

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