3 Issues to Watch Like a Hawk If You Buy ChargePoint Stock

As demand for electric vehicles (EVs) increases, there will be an increasing need for the infrastructure to support EV use. It isn't enough to just build the cars -- the world also needs the ability to power them.

That is what ChargePoint (NYSE: CHPT) is building. It could be a huge opportunity, but there are still very real risks. Here's a look at what ChargePoint does and three things that ChargePoint investors will want to watch like a hawk as it builds out its charging network.

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What does ChargePoint do?

From a big-picture perspective, ChargePoint is building an EV charging network. But there's a lot that goes into this effort. Unlike gasoline-powered vehicles, charging an EV can take place in far more locations.

There are increasing EV chargers found at gas stations, building off of the current internal combustion engine infrastructure. But there are also chargers at stores, offices, and in people's homes. The dynamics are very different from those of the infrastructure supporting internal combustion engine vehicles.

Image source: Getty Images.

That's both good and bad. It means that there are more opportunities to sell charging technology. But it also means that there's a need for many different charging technologies and charging models.

Powering up overnight at home is not the same as powering up on the go at a "gas" station. Simply put, the addressable market is much larger, and ChargePoint is trying to stake out a position in virtually all aspects of the charging opportunity.

There are several important issues for investors to monitor. Here are three of the big ones.

1. Will the real business model please stand up?

It is very hard to be all things to all people, but that is kind of what ChargePoint is trying to do right now. And its income statement highlights this issue. In fiscal 2025, which ended Jan. 31, ChargePoint reported revenue of $417 million, down from roughly $507 million in the prior year. That isn't great news.

Underneath that number, however, subscription revenue rose roughly 20%. Subscriptions are kind of like an annuity income stream, reliably providing cash to the company regardless of what is going on in the world. Building this side of the business is a good idea, and 20% growth in a year is good news.

However, ChargePoint needs to develop, sell, and install chargers if it wants to build up its subscription base. Revenue from selling charging systems fell roughly 35% year over year in fiscal 2025. That's not great news, but it maybe isn't terrible news.

There's a balancing act that is going on right now, and it isn't exactly clear how ChargePoint moves forward as a company. Investors need to monitor how the company develops and consider what its shifting income streams suggest about the future.

2. The bottom line isn't pretty

That said, the increase in revenue from subscriptions helped the company improve its margins. In fact, the gross profit more than tripled during fiscal 2025 to roughly $100 million. But a gross profit isn't earnings -- there are a lot of costs that show up below that line of the income statement.

For example, ChargePoint's research and development spending alone was over $140 million. Since it is still early days in the EV industry, that spending is pretty much mandatory. Then there are the sales and marketing costs, which totaled around $131 million. The company may be able to reduce its spending there, but it certainly can't stop selling its products.

Finally, there are the general and administrative costs of around $80 million. That can only be cut so far before the business starts to operate inefficiently.

When you finally get to the bottom line, that gross profit is more than dwarfed by the company's costs. And ChargePoint ended up losing roughly $282 million. That, however, was down from a loss of nearly $458 million the year before. The red ink is highly likely to continue over the next few years, but investors will want to watch to make sure there is at least some progress toward profitability each year.

CHPT data by YCharts

3. Positive adjusted EBITDA in at least one quarter of fiscal 2026

One of the metrics that ChargePoint's management highlights is adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Having a positive adjusted EBITDA is one of the stepping stones on the way to a profit on the bottom line. And the company has a goal to achieve a positive quarterly adjusted EBITDA in fiscal 2026.

There's just one wrinkle: It doesn't know (or at least isn't telling anyone) which quarter it expects that to happen in. And the goal appears to be to achieve this feat in just one quarter.

This isn't the most reassuring goal, given its vague nature. While it would be nice to see the company have positive EBITDA, doing it for one quarter and then falling back to negative adjusted EBITDA might actually be seen as an undesirable outcome on Wall Street.

On the one hand, investors will want to make sure that management lives up to its stated goals, which is important from an execution point of view. On the other, investors might want to consider what this goal means, if anything, to the company's drive toward profitability.

ChargePoint is not for the faint of heart

ChargePoint is an upstart in an industry that is still very young. There are some rather large issues that are up in the air, and that should probably bother investors.

For starters, it isn't exactly clear if the company has settled on a business model. There's also the ability of the company to become profitable, which needs to happen at some point if it wants to remain a going concern. And then there's the financial goals management has laid out. Can it hit them, and does that even matter?

All in, ChargePoint is an interesting story, but one that should probably only interest more aggressive investors.

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

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Reuben Gregg Brewer 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.