Tortoise Acquisition Corp. II (NYSE:SNPR) stock represents equity in the blank check company which is focused on EV mergers. The shares came public back in September. Per SPAC rules, Tortoise Acquisition had up to two years from that date to identify an acquisition target.
On Feb. 8, the company announced it will merge with Volta Industries, an operator of public electric charging infrastructure. The two companies will trade under the NYSE ticker VLTA once the merger is complete. Prices peaked on the Feb. 8 announcement, but have since retreated.
So, does Volta Industries look like a company with growth on the horizon and attractive financial metrics?
To answer that question, we should start with the investor presentation.
Unique Play on EV Charging
Volta has set itself out against competition in at least one regard. All of its competitors are looking to carve out a niche within the $500 billion EV charging market. However, Volta’s charging stations have something that its competitors don’t.
Volta’s charging stations have media enabled screens that allow for advertising. A trial at Volta-enabled Whole Foods locations showed promising results. Tolerant Foods saw a 35% uptick in sales following a campaign at select stores. Larger companies couldn’t realistically expect such results, but the concept is proven on a small scale for select brands.
Ultimately what’s important here is that Volta has an extra revenue stream that competitors don’t. The overall effect remains to be seen.
Volta anticipates that by 2025, 37% of its revenues will come from a category it calls “behavior and commerce.”
My thesis is that a prime driving factor that will separate the winners from the losers in the race to build EV infrastructure is simply availability. So, it follows that raw installation metrics go a long way in shaping that narrative.
Volta had somewhere around 1,500 charging stations available to end 2020 per its investor presentation projections. EVgo, another EV charging company being brought public via a SPAC through Climate Change Crisis Real Impact I Acquisition Corp. Cl A (NYSE:CLII), is a direct competitor of Volta.
EVgo has 800 stations currently to Volta’s 1,500. ChargePoint (NYSE:CHPT) has over 132,000 globally. It’s clear that ChargePoint has a significant lead in that regard. Volta projects that it will have roughly 26,000 installed stations by 2025.
Revenues and Profit Projections
The investor presentation indicates that Volta won’t become EBITDA positive until 2023. The capital expenditures to fund those ongoing losses is to be provided by transaction capital raised during the SPAC process.
Investors understand that nascent industries like EV infrastructure go through growing pains and are rife with early losses. They stick around through the growing pains for the big returns.
However, there is a lot of movement in this sector and other players could simply get to positive quicker.
One of the reasons investors buy into SPACs is that they believe in the team identifying a strong target. So it stands to reason that money should flow into SNPR stock if Tortoise Acquisitions Corp. is perceived as being adept in that regard.
If Tortoise Acquisitions Corp. sounds familiar, perhaps that’s because this is not the company’s first blank check deal. The company brought Hyliion (NYSE:HYLN) public via a bank check merger back in early October.
Hyliion shares increased very quickly, and in fact appreciated roughly 285% between the time Tortoise Acquisitions announced it was looking for an acquisition target, and the merger.
Since then though, the story has been starkly different. Hyliion shares dropped significantly since the merger.
This doesn’t imply that SNPR shares will necessarily suffer the same fate when they become VLTA sometime this year. However, timing is important in the SPAC world. Investors should, at a minimum, keep in mind that pre-merger gains outpace post-merger gains.
The Verdict on SNPR Stock
I don’t think Volta has enough size to disrupt more established players in this land grab. I wouldn’t buy in now.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.