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Even the best stock pickers will make plenty of bad investments. Anyone who held ChargePoint Holdings, Inc. (NYSE:CHPT) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 60%. ChargePoint Holdings hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 35% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 17% in the same timeframe.
If the past week is anything to go by, investor sentiment for ChargePoint Holdings isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Because ChargePoint Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
ChargePoint Holdings grew its revenue by 83% over the last year. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 60%. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for ChargePoint Holdings in this interactive graph of future profit estimates.
A Different Perspective
ChargePoint Holdings shareholders are down 60% for the year, even worse than the market loss of 18%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 35% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that ChargePoint Holdings is showing 4 warning signs in our investment analysis , you should know about...
ChargePoint Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.