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Stock Analysis & Ideas

Volta: The U.S. Government Just Made This Stock Attractive

Story Highlights

When a business has the government on its side, investors can hold their shares with more confidence. In Volta’s case, the White House’s plan to built out a national network of 500,000 electric vehicle chargers bodes well for the company and its stakeholders.

San Francisco-based Volta (VLTA) develops and manufactures electric vehicle (EV) charging stations. I am bullish on the stock.

As an investor, your elected leaders can either help you or hinder you. For the long term, it’s wise to position yourself to benefit from the dealings on Capitol Hill rather than try to fight an uphill battle against the government.

In the U.S., President Joseph Biden has made it crystal clear that he supports clean energy initiatives. As Russia’s invasion of Ukraine puts upward pressure on petroleum and natural gas prices, the White House has an opportunity in 2022 to pursue its energy transition objectives, including the build-out of America’s EV infrastructure.

Meanwhile, Volta has already been in business since 2010 and is aggressively commercializing its brand of faster, “smarter” EV chargers. After breaking down the Biden administration’s ambitious goals for the nation’s shift to cleaner fuel sources, investors can think about adding a few shares of Volta stock to charge up their portfolios this year.

A Rapidly-Growing Network

If you truly believe in buying when other traders are selling, then here’s an opportunity for you. When Volta went public in August of 2021 after a SPAC transaction with Tortoise Acquisition Corp. II, the share price was fairly close to $10. More recently, Volta stock traded below $2.

Admittedly, early shareholders aren’t faring well so far. This could present a chance to Buy a handful of Volta stock shares at a deep discount, though. If the company grows, your portfolio’s value could grow, too.

So, what separates Volta’s charging ports from the competition’s offerings? Sure, Volta’s chargers are built for speed and efficiency, but Volta isn’t unique in this respect. Rather, the most significant differentiating factor is the visual appeal of Volta’s “smart” EV chargers.

Volta’s EV charging stations, according to the company, are “equipped with large digital display screens, are strategically located steps from the entrances of popular retail, grocery, and entertainment venues.”

Hence, there are advertising/marketing opportunities beyond the EV charging experience here: “These premium placements influence consumers’ shopping lists with eye-catching content presented on a sustainable medium within the uncluttered parking lot environment.”

In other words, the customers probably aren’t doing anything exciting while they’re charging up their vehicles, so Volta can let them watch “content” (and, presumably, advertisements) while they wait. Regarding this, the numbers are impressive, as Volta’s EV charger network “creates more than 900 million monthly impressions via 4,600+ digital ad screens in 39 Designated Market Areas (DMAs) across 26 states.”

Don’t be surprised, then, if you soon see a Volta charger serving up both an electric current and a slew of visual advertisements at a grocery store, convenience store, or shopping mall near you in the near future.

New Steps Toward a Cleaner Planet

If you’re not on board yet with Volta’s vision of a vast network of visually dynamic EV charging stations, then take a glance at the company’s financials. Perhaps the hard data may make you a believer.

During 2022’s first quarter, Volta grew its revenue 77% year-over-year to $8.4 million. Also, within that time frame, Volta’s total number of installed stalls increased 39%. Additionally, the company narrowed its net earnings loss from $65.2 million in the prior-year quarter to $48.1 million in Q1 of 2022.

Ideally, Volta wouldn’t have a net earnings loss at all. However, it’s not uncommon for EV-market businesses in the 2020s to still be in the process of working toward profitability. Therefore, investors should be patient, as Volta is at least improving in this area.

Of course, it’s much easier to be patient when a company has the backing of the U.S. government. This month, the White House announced “new steps” to establish a network of 500,000 EV chargers as part of the Bipartisan Infrastructure Law. In total, that law allocates $7.5 billion for EV charging infrastructure in the U.S.

The announcement seems to suggest that the half a million EV charging ports will be distributed across all 50 states, as it specifies, “The new standards will ensure everyone can use the network –no matter what car you drive or which state you charge in.”

Of the earmarked $7.5 billion, the National Electric Vehicle Infrastructure program will provide $5 billion to U.S. states to “build out charging infrastructure along highway corridors.” Apparently, the other $2.5 billion will include grants to “support community and corridor charging” while also supporting “EV charging access in underserved and overburdened communities.”

Wall Street’s Take

Turning to Wall Street, VLTA is a Moderate Buy based on three Buys, three Holds, and one Sell rating assigned in the past three months. The average Volta price target is $4.71, implying 186.3% upside potential.

The Takeaway

As the government commits billions of dollars to build out a vast EV charging station network, Volta stands to benefit as a premier provider of “smart” chargers. The company isn’t profitable at the moment, but that issue could be solved in due time as the White House offers robust financial support for America’s EV infrastructure.

With all of that in mind, risk-tolerant investors can consider holding a few shares. It’s an interesting way to wager on the long-term expansion of a niche industry with the backing of a powerful partner, the U.S. government.

Disclosure

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