ChargePoint Stock Ripped 83% Higher in September. Is It a Buy?
Key Points
ChargePoint reported its best-ever quarter in September.
That triggered a classic short squeeze in the EV charging stock.
The company believes it is moving towards sustainable growth.
Betting against ChargePoint (NYSE:CHPT) had become the easy trade. Electric vehicle (EV) sales were slowing and the charging infrastructure provider was rapidly burning cash. ChargePoint became a favorite target for short-sellers.
Then, September arrived.
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ChargePoint stock staged a dramatic comeback and surged 83.3% in the month, according to data provided by S&P Global Market Intelligence.
Here's all you need to know.
Image source: Getty Images.
What's happening with ChargePoint stock?
The big trigger came right at the beginning of September when ChargePoint released its second-quarter fiscal 2027 earnings report. Revenue rose 18% to $116.1 million, GAAP gross margin jumped to 36% from 31% a year ago, and net loss nearly halved to $35.6 million.
It was the strongest quarter in the history of a company that was founded in 2007. ChargePoint shares ripped 75% higher in a single session.
One good quarter doesn't explain a move that size, though, but a heavy short position does. Traders who bet on a falling price had to buy shares to close out their positions, which pushed the price up and forced more of them to buy.
It was a classic short-squeeze, and a reminder that when a heavily shorted stock suddenly shows operational discipline, a rally can stun even the biggest skeptics.
To ChargePoint's credit, it expanded its Mercedes-Benz (OTC:MBGAF) fleet partnership in Europe, began shipments of its new Express Solo fast charger, and electrified rental fleets at Portland Airport.
CEO Rick Wilmer also mentioned the hot word -- artificial intelligence (AI) – during ChargePoint's earnings call, stating that "AI is fundamentally changing" the way the company operates. Some of its AI initiatives include "compressing software development cycles, automating business processes," and accomplishing more with less.
Should you buy ChargePoint stock before it's too late?
Wilmer seized the moment and told CNBC the stock's rally is "the beginning of the momentum." He expects new products and technology to drive ChargePoint's growth from here.
Here's a reality check: one quarter is too early to decide if a company has turned around.
ChargePoint expects only 4% revenue growth at the midpoint for the third quarter. Also, part of the Q2 margin boost came from one-time tariff refunds, not core operations.
The EV industry now has to run without legacy government subsidies amid intense price competition. That makes sustainable profit on low single-digit revenue growth a steep climb.
ChargePoint has shown us that it can operate more efficiently and preserve cash. Now, it must prove it can execute for the long haul as the challenge shifts from survival to sustainable execution.
Neha Chamaria 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.