Volta Charging (NYSE: VLTA), an American EV charging station company whose chargers feature digital advertising, has fallen toward a new all-time low today. The stock closed at $1.33, just 11 cents above the previous recorded low of $1.22; the tumble comes as the company announced "strategic reprioritization" which includes layoffs and continued prioritization of charger installations that qualify for government funding.
The bad news is that the company has cut its Q3 revenue guidance down to $13.5-14.5 million (down from previous guidance of $17-18M) and withdrawn full year revenue guidance. Perhaps the weakened advertising environment pushed Volta to make this decision. There are no doubt significant near-term challenges.
Overall, the stock is down 87% from its initial SPAC valuation of $1.4 billion. When looking at the stock, what's concerning is that the company appears to have less than a year's worth of cash left on the balance sheet. The way it stands now is that they will be highly reliant on government funding, of which there is currently plenty to go around, especially for EV charging infrastructure. This will certainly help with installations but is it enough to keep the company going until they see profitability? A quick rundown of their cash positions from the company's own reports:
- 9/30/21 - $331,254,000
- 12/31/21 - $262,260,000
- 3/31/22 - $205,408,000
- 6/30/22 - $105,268,000
Current analyst opinions imply an upside for the stock from here, but the current macroeconomics will certainly be a headwind from all angles. Companies are spending less on advertisings, as they seek to cut costs.
There are some current potential tailwinds for Volta too that cannot be ignored. They could secure a piece of funding from several of these government programs/sources:
- $40 billion in additional commitment authority for eligible project under Title XVII of the Energy Policy Act of 2005 through Sept. 30, 2026
- The Inflation Reduction Act of 2022 and expands Section 30C (Alternative Fuel Refueling Property Tax Credit), potentially benefitting the EV infrastructure industry
- Infrastructure Investment and Jobs Act has $7.5 billion in dedicated funding over the next 5 years for EV infrastructure
Volta has also partnered with the City of Hoboken to demonstrate a new model for communities.
I am currently undecided. The stock seems very cheap at these levels, with a solid risk/reward going forward. However, even at its current levels, there could be an additional drawdown. If it were to go under $1, it would seem just too cheap to pass up; at least worth a starter for a potential crucial player in the EV industry. It's certainly worth a closer look.
