Stock in ChargePoint, a prominent player in the electric vehicle charging equipment industry, took a major hit in early trading following the release of disappointing third-quarter results and significant management changes.

Weak Sales and Revised Guidance

On Thursday evening, ChargePoint (ticker: CHPT) announced that its third-quarter sales were projected to range between $108 million and $113 million. This revision directly contradicts the previous guidance which forecasted sales between $150 million and $165 million. Unsurprisingly, Wall Street analyst expectations were set around $150 million. Given that ChargePoint's fiscal quarter ended in October, this report came shortly after the company had closed its books.

Unclear Non-Cash Charge

In addition to the weak sales figures, ChargePoint is also taking a non-cash charge of $42 million against earnings. Unfortunately, the press release lacks detail on the reason for this charge, as ChargePoint did not respond to immediate requests for comment.

Operating Expenses and Cash Position

Despite the disappointing sales figures, operating expenses remained consistent, totaling around $80 million. As of October, ChargePoint had approximately $400 million in cash and had access to an undrawn $150 million revolving credit facility.

Market Reaction

This update from ChargePoint is undeniably concerning. In premarket trading on Friday, shares took a significant hit, plummeting approximately 27%. In contrast, S&P 500 futures remained flat, and Nasdaq Composite futures experienced a slight increase of 0.2%.

CEO's Explanation

CEO Rick Wilmer addressed the disappointing results in a news release, citing significant pressure in their core markets of North America and Europe during the latter part of the third quarter. Falling revenue significantly fell short of expectations due to various macroeconomic conditions, along with delays in fleet and commercial vehicle deliveries. Consequently, this affected anticipated deployments with government, auto dealership, and workplace customers.

ChargePoint now faces the challenge of regaining investor confidence and stabilizing its operations amidst these unfortunate circumstances.

Higher Rates and the Impact on Builders

Higher rates have had a significant impact on builders' ability and willingness to invest in charging infrastructure. This, in turn, has slowed down the economy, aligning with the intentions of the Federal Reserve.

Sales Miss and Leadership Changes

For two consecutive quarters, there has been a sales miss, resulting in some leadership changes. Wilmer has taken over as the new leader, following Pat Romano's departure. Additionally, Mansi Khetani has assumed the role of CFO, replacing Rex Jackson.

ChargePoint Leading the Way in EV Charging

ChargePoint continues to be the leading EV charging company in the United States. Compared to its publicly traded competitors, its expected second-quarter sales of approximately $110 million are significantly larger. Wallbox (WBX) reported $33 million in third-quarter sales, while EVgo (EVGO) reported around $35 million. Blink Charging (BLNK) generated around $43 million in third-quarter revenue, and Beam (BEEM) reported about $16.5 million.

Decline in ChargePoint Stock

There has been a significant decline in ChargePoint's stock leading up to the release of its third-quarter results. Over the past 12 months, the shares have experienced a staggering 75% decrease.

Downgrades and Analyst Ratings

Roth MKM and Janney Montgomery Scott have downgraded ChargePoint stock from Buy to Hold. Presently, approximately 74% of analysts who cover ChargePoint shares rate them as Buy. Comparatively, the average Buy-rating ratio for stocks in the S&P 500 is around 55%. The average analyst price target for ChargePoint is approximately $9 per share.

Anticipated Changes After Third-Quarter Update

It is expected that both the ratio of Buy-ratings and the price target will undergo further changes following the release of the third-quarter update.