Low-Priced Electric Vehicle Charging Play Volta Stock Isn’t a Bargain

  • Electric vehicle charging company Volta (VLTA) has dropped over 70% year-to-date.
  • In terms of more recent losses, company-related developments have played as much of a role as the growth stock selloff.
  • Although recent news has helped shares perk up, it’ll likely remain in the stock market graveyard.
A photograph of a Volta (VLTA) charging station.

Source: Tada Images / Shutterstock.com

It goes without saying it has been a tough year for investors in electric vehicle (EV) stocks. That’s especially true for investors in Volta (NYSE:VLTA). While other electric vehicle charging plays have also experienced double-digit declines in recent months, VLTA stock has seen an even sharper slide.

Since January, it has dropped over 70%. Over the past six months, when growth stocks started to head south, it has tanked 80%. Speaking of which, you may think that its selloff is entirely due to the growth stock selloff, and the resultant drop in EV and EV-related stocks.

However, market conditions aren’t the only factor behind its drop. Underwhelming results, disappointing guidance and even an exodus in the C-suite have all had an impact. More recent news may suggest the situation is on the verge of improving, but I wouldn’t jump to that conclusion. There’s a good chance this busted EV play stays at rock-bottom prices.

Ticker Company Current Price
VLTA Volta $2.18

Why VLTA Stock Has Plunged More Than Its Peers

Obviously, the selloff in growth stocks since last November, when inflation/interest rate fears began to wreak havoc on the market, has played a role in Volta shares losing more than four-fifths of their value.

But along with this, news about the company has played a role in the continued slide of VLTA stock. For instance, two red flags that have emerged. First, news of it having to restate third quarter 2021 earnings due to an accounting error. Then, the announced departures of CEO Scott Mercer and President Chris Wendel, both co-founders of the company.

Along with this, disappointing results with its fourth quarter (Q4) 2021 earnings report, which was delayed and not released until April. For Q4 2021, Volta reported higher-than-expected losses. It also walked back guidance. For the full-year 2022, it expects to generate between $70 million and $80 million. This amount at the time of its announcement was below analyst expectations.

In short, it’s not only a market in panic mode that has pushed Volta to rock bottom prices. Worse yet, even as the stock has begun to bounce back in recent days, don’t view this as a sign of a comeback on the horizon.

Don’t Expect Recent Bounce Back to Last

Even if you hadn’t bought VLTA stock until as recently as mid-April, you would still be sitting on moderately high losses. That said, if you dived into it after its trip down below $2 per share earlier this month, admittedly you would be sitting on a gain.

After an extended decline, Volta shares have popped back. This is thanks to a more positively received earnings report for Q1 2022. Revenue and earnings came in-line with the analyst community’s dialed-back expectations. In addition to an earnings report with few surprises, the EV charging company also had some news partnership news that was positively received by investors.

After a spate of negative developments, the positive news released on May 13 have helped the stock make it back above the $2 per share mark. Unfortunately, chances are this bounce back will not last.

There are several key issues that indicate that a further recovery is not in the cards. Recent numbers do little to remedy the above-mentioned issues. With guidance left unchanged, little has changed when it comes to the company’s future expected growth. On top of this, Volta reiterated in its latest updates another key risk for shares.

The Verdict on VLTA Stock

What other risk for Volta am I referring to? Going concern risk.  There’s “substantial doubt” (Volta’s words) about its ability to continue operating over the next twelve months.

In other words, its cash position is dwindling down. In the most recent quarter, its cash position dipped from $262.3 million down to $205.4 million. With losses set to continue, it needs to raise more capital to keep the lights on.

Raising more cash would likely result in the dilutive issuance of new shares. With this risk factor atop existing risks/concerns, it’s clear why this stock earns an “F” rating in my Portfolio Grader.

Shares collapsed due to both changing market conditions, plus a re-assessment of expectations about its future. There’s little to suggest its prospects are improving. Coupled with red flags suggesting more challenges ahead, it may be best to skip out on VLTA stock.

On the date of publication, Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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