ChargePoint's Stock Is the Cheapest It's Ever Been. Here's 1 Thing to Know Before You Buy.

The current market downturn is surely rattling the nerves of many investors, but those who have endured bear markets in the past know that it's time like these where great buying opportunities emerge.

One candidate, for example, is ChargePoint (NYSE: CHPT) stock, which has fallen 67% over the past year and now trades at a historically low valuation. Currently, it's changing hands at a price-to-sales ratio of a mere 0.64.

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But before investing in shares of this electric vehicle (EV) charging company, it's critical to be clear about one aspect of the company's financial situation.

Several green flags exist, but a glaring yellow flag has been raised

With fiscal 2025 in the rear-view mirror, there are some clear reasons why potential investors would get charged up about ChargePoint's financial performance. For one, the company expanded its gross profit margin to 24% in fiscal 2025 from 6% in fiscal 2024. And that's not the only indication of improved profitability. ChargePoint also narrowed its net loss to $283 million in fiscal 2025 compared to a loss of $458 million in the previous year.

Progress toward generating a profit is encouraging, but the top of ChargePoint's income statement has a source of concern. Revenue declined almost 18% from $506.6 million in fiscal 2024 to $417.1 million in fiscal 2025 -- not an auspicious sign for a growth stock. While the company grew its subscription business year over year, sales of networked charging systems plunged 35% from fiscal 2024 to fiscal 2025.

Should you plug ChargePoint in to your portfolio?

Laying claim to the largest network of EV chargers in the United States, ChargePoint is an obvious consideration for EV investors. The company's shrinking revenue, however, is a major concern, albeit unsurprising. Enthusiasm for EVs that pervaded the market several years ago has tapered off as car buyers have largely remained committed to traditional combustion engine-powered vehicles -- a development that has also led carmakers like Ford to reel in their EV spending.

At this point, therefore, only investors with ample risk tolerance should consider picking up shares of ChargePoint.

Should you invest $1,000 in ChargePoint right now?

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Scott Levine 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.