In the ultra-competitive market of electric vehicles (EVs), there’s quite a bit of volatility that can quickly bring a stock that’s riding high back down to earth. Case in point: Volta Inc. (NYSE:VLTA). The EV charging play has been spending the last few weeks inking deals, filing patents and generally moving forward with the progression of its business model. However, today’s quickly spelling trouble for the company, all because of a declaration by the Securities and Exchange Commission (SEC) that’s scaring holders. As such, VLTA stock is seeing some steep downward momentum.
San Francisco-based Volta is an EV play focused on bringing EV charging availability to a broader market. Additionally, it deals in targeted advertisements. The company creates EV stations with screens. These allow for the charging of the vehicles while also providing valuable real estate for advertisers. Since its initial public offering (IPO), the company has partnered with companies like Six Flags Entertainment (NYSE:SIX) while also installing charging stations in cities like Fairfax, VA, and Lawrenceville, GA.
Volta is definitely not a hypergrowth stock. The EV charging company, which came public toward the end of August, has seen some decent gains and some painful losses in equal measure. Today, though, there are dilution worries that are causing a selloff and a sharp windfall for the stock.
VLTA Stock Faces Selloff, Despite Optimistic News Early This Week
VLTA stock started out the week on good terms. Just yesterday the company made a big announcement about two new patents it had secured — both relating to charging-station-based advertising technology. While it didn’t send VLTA stock skyrocketing, the company was boosting itself up slightly from its sideways trend. Today’s news, though, is undoing those small gains and sending the stock plummeting.
The SEC is reportedly freeing up shares of VLTA stock to be sold, and in turn sending stock dilution worries throughout the VLTA investor base. The trading agency is declaring effective a registration statement. The statement allows for the sale of over 116 million shares of VLTA. This includes 30 million shares initially sold through private sales and PIPE (private investment in public equity) placements.
Of course, with this new huge wash of stock now flooding the market, investors are selling their shares on dilution fear. The stock is now plummeting over 25% on extremely high volume. Over 12 million shares of VLTA are trading so far today, against an average of just 800,000.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.