VLTA Stock Is an EV Charger Stock to Watch
The ultimate success of the adoption of electric vehicles (EVs) depends on various factors, including tax credits and rebates, affordable base prices of EVs, and the expansion of EV charging infrastructure. Without this, I doubt EV adoption will accelerate, due to the current limitations of lithium batteries.
Think about how many gasoline and diesel stations are in place. Now think about how often you see an EV charging station. The EV charging segment is still in its early stages, and its growth is expected to be massive. The EV charging market is fragmented, with many new players entering the field.
One EV charging company that should be on investors’ radar is Volta Inc (NYSE:VLTA).
What makes Volta different from other providers of EV chargers is that the company combines Its charging stations with large-format digital advertising screens. This allows the company to generate advertising revenues in addition to its other revenue streams. (Source: “Corporate Overview,” Volta Inc, last accessed December 14, 2022.)
Volta installs its EV chargers in high-traffic areas such as the parking lots of malls, large retail stores, and theaters.
Like the rest of the EV stocks, Volta stock has been decimated. Shares of Volta Inc debuted via a special purpose acquisition company in September 2021. At the time, Volta had a market valuation of $2.0 billion. That valuation was clearly excessive, as the company only had $32.3 million in revenues in 2021, representing a multiple of 67,198 times revenue.
VLTA stock is extremely speculative, even after Volta Inc’s market valuation declined by 96% to $82.0 million. It seems that only risk capital should be used for Volta stock.
Chart courtesy of StockCharts.com
Volta Inc has High Hopes for Financial Growth
Volta Inc only has two years of reported financial history, but that history shows growth.
The company’s revenues surged by 66.1% from $19.5 million in 2020 to $32.3 million in 2021. Analysts expect Volta to deliver revenues of $56.1 million in 2022 and $84.6 million in 2023. (Source: “Volta Inc. (VLTA),” Yahoo! Finance, last accessed December 14, 2022.)
Those estimates are attractive (assuming Volta delivers on them). As of this writing, VLTA stock trades at 1.46 times the company’s consensus 2022 revenue estimate and 0.96 times its consensus 2023 revenue estimate.
While Volta Inc focuses on ramping up its revenues, the company is still years away from delivering positive earnings before interest, taxes, depreciation, and amortization (EBITDA); generally accepted accounting principles (GAAP) diluted earnings per share (EPS); and free cash flow (FCF).
|Fiscal Year||EBITDA (Millions)||GAAP Diluted EPS||FCF (Millions)|
(Source: “Volta Inc.” MarketWatch, last accessed December 14, 2022.)
An encouraging sign is that analysts expect Volta’s GAAP diluted EPS loss to narrow to $0.95 in 2022 and to $0.72 in 2023. (Source: Yahoo! Finance, op. cit.)
Well down from its high of $12.98, having dropped to a low of $0.43 on December 6, Volta stock presents a compelling risk/reward opportunity in the EV sector for aggressive risk capital.
Although VLTA stock is highly speculative, if Volta Inc delivers on its financial growth estimates, I could see the stock mount a strong rally.