With burgeoning evidence of climate change no longer commanding the benefit of reasonable deniability, it’s patently clear that everyone needs to play their part to stem the tide. One of the more viable transitions society can make is adoption of electric vehicles (EVs). Thanks to companies like Tesla (NASDAQ: TSLA), EVs have moved beyond niche categorization and into mainstream awareness and desirability.
But a standing challenge is convenience, as not every driver has access to charging stations. Fortunately, EV infrastructure specialist Volta aims to fill the gap with comprehensive solutions, drawing much interest for its initial public offering (IPO).
- When Is the Volta IPO Date?
- Volta Financial History
- Volta Potential
- How to Buy Volta IPO (VLTA) Stock
- VLTA Restrictions for Retail Investors
- VLTA Pre-IPO
- Extraordinary Opportunity with Extraordinary Risk
When Is the Volta IPO Date?
Similar to many other high-potential (though admittedly high-risk) technology ventures, Volta’s journey as a public entity veered away from the traditional route. Instead, retail investors now have access to the company’s shares thanks to a merger with Tortoise Acquisition II Corp (NYSE: SNPR), a special purpose acquisition company (SPAC).
Officially on the IPO calendar, Volta made its debut on Friday, August 27. Shares trade on the New York Stock Exchange under the ticker symbol VLTA.
Commonly, the assumption many if not most investors have when they purchase a publicly traded security is that the issuing company features a legitimate business. For the vast majority of stocks traded in major U.S. exchanges, this assumption is fact. However, SPACs represent a different breed in that they don’t have an underlying business. That’s why analysts sometimes refer to SPACs as blank-check firms or shell companies.
Instead, SPAC sponsors spark an IPO of their own in the hopes of identifying a promising merger target. Once discovered and assuming the shell company’s shareholder approval, the SPAC merges with the target enterprise, with the SPAC dissolving its identity and adopting the target’s brand. On the other end of the business combination, the enterprise becomes a publicly traded company through the backdoor, hence the term reverse merger.
In Volta’s case, Tortoise Acquisition II launched its IPO for 30 million units at a price of $10 per unit on September 10, 2020. This capital raise represented an upsizing, which isn’t surprising for the context at the time. The SPAC’s sister company had earlier taken alternative transportation solution provider Hyliion (NYSE: HYLN) public last year, with that particular business combination finalized in early October 2020.
Therefore, many speculators reasoned that not only do Tortoise sponsors have the skills in identifying innovative private enterprises, they have tremendous know-how in the broader EV industry. However, it’s also important to point out that Hyliion has been a disappointment since completing its SPAC merger. As well, VLTA stock did not perform up to expectations on its launch day.
In other words, prospective investors must perform due diligence before proceeding.
Volta Financial History
While any organization on the cutting edge of technology poses serious risks — namely, the ability to transition innovation from the laboratory to the commercial market — companies like Volta offer an upside proposition that you can’t get betting on established blue chips. Moreover, Volta’s long-term strategy of upgrading already-existing infrastructure to accommodate next-generation personal mobility trends commands substantial credibility.
According to information compiled by the American Petroleum Institute, more than 150,000 fueling stations operate in the U.S., with 127,588 of these stations featuring an adjacent convenience store business. The rest, according to the API, “are gas-only stations, grocery stores selling fuel, marinas, etc.”
More importantly, research from the Edison Electric Institute states that the “number of EVs on U.S. roads is projected to reach 18.7 million in 2030, up from 1 million at the end of 2018. This is about 7 percent of the 259 million vehicles (cars and light trucks) expected to be on U.S. roads in 2030.”
If that didn’t get your attention, consider the forecast of BloombergNEF, an energy research firm. It stated a few months ago that “even with no new economic or policy initiatives put forth by global governments, EVs and other zero-emissions vehicles will account for 70 percent of new-vehicle sales by 2040, up from 4 percent in 2020.”
Put these catalysts into your calculations and you end up with “a portion of the $500 billion in revenue” from these gas stations being “up for grabs for companies like Volta,” states Benzinga’s own Chris Katje. Currently, Katje states that “Volta has charging stations in 23 states. The company has 3,014 screens installed at 1,507 stations at 459 sites.”
But based on surging momentum for EVs, “Volta estimates it will have 3,142 stations in 2021. Contracted deals call for 2,224 screens and 1,112 stations added at 471 sites,” contributing to an estimated revenue of $47 million in fiscal year 2021. Even better, management projects sales to increase by a compound annual growth rate of 100% from 2020 to 2025, with a possible $826 million generated by the end of the forecasted period.
As a holistically accretive solution provider, Volta’s ultimate goal is to integrate its services into the realm of the banal. How many times have you popped into the convenience store to pick up some snacks while filling your SUV? Or watched a compelling advertisement for a product you need pop up on the gasoline pump’s television monitor?
You might not consciously recognize it, but your actions are the culmination of carefully crafted social engineering protocols. Needless to say, behavioral science application is a profitable business. Essentially, Volta’s ambitions are no different from traditional retail institutions’ endeavors — only the scenery (from fossil fuels to electrification) has changed.
Though extraordinarily intriguing, investors should note that Volta is a secondary business; that is, the company depends on the successful rollout of its primary counterpart, EV manufacturers. If they stumble, VLTA stocks risk severe volatility.
Additionally, keep in mind that the mathematical probability that EV integration forecasts miss their targets is a non-zero number. Remember, Congress passed a voluntary proposition in 1975 to switch the U.S. to the international metric system (which obviously failed).
If Americans can’t adopt a sensible change to their units of measurement, is it realistic to assume they will adopt an entirely radical shift to their mobility systems?
How to Buy Volta IPO (VLTA) Stock
Amid the explosion of IPOs over the trailing year-and-a-half period, many private enterprises decided to enter the public market via business combinations with blank-check firms. A key advantage that the SPAC platform offers relative to the traditional IPO process is speed of execution.
Under the usual bread-and-butter approach, companies interested in going public must undergo extensive vetting procedures. Not only is this route more expensive on an upfront basis, it’s usually more time intensive. For tech-centric organizations that want the first-to-market advantage, SPACs facilitate a direct streamlined process.
For retail investors, the advantage is they have access to opportunities that they would ordinarily not have if every company had to IPO in the traditional manner. And because SPAC shares trade like any other equity unit, the process of participation is intuitive if you already know how to buy stocks. If not, just follow the steps below.
Step 1: Pick a brokerage.
For investors serious about IPO participation, you should research brokerages that offer pre-IPO access (or the ability to purchase new issues at their original offering price) for select entities with public market ambitions. Below is a list of best brokers to help you narrow down your list of prospects.
Step 2: Decide how many shares you want.
With volatility being the hallmark of IPOs — and VLTA stock proved as such with its crimson-laden debut — you should choose a balanced share count that facilitates upside but mitigates risk.
Step 3: Choose your order type.
Before trading, familiarize yourself with these market concepts.
- Bid: A buyer’s highest price, the bid is always lower than the ask.
- Ask: The lowest a seller will accept, the ask is always higher than the bid.
- Spread: The bid-ask price difference, the spread also signals market liquidity and risk. Tighter spreads indicate higher liquidity and lower risk due to strong trader involvement, while wider spreads indicate a low-volume, high-risk scenario.
- Limit order: A price-specific trade request, limit orders provide transparency but no execution guarantees.
- Market order: Conversely, market orders guarantee fulfillment but only at the prevailing rate, which typically changes constantly.
- Stop-loss order: A protective stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only execute at a predetermined price, facilitating transparency in your automated exits. However, such orders carry the same non-fulfillment risk as limit orders.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
VLTA Restrictions for Retail Investors
Before participating, review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons. Basically, you cannot profiteer privileged information.
Recently, services like ClickIPO purchase blocks of pre-IPO shares of select enterprises for the ultimate distribution to interested buyers. Anyone with IPO-investing ambitions should consider opening an account.
Extraordinary Opportunity with Extraordinary Risk
Assuming a majority of Americans transition to EVs, Volta’s IPO offers tremendous upside as the underlying infrastructure business helps bring transportation to the next level. However, this is a mighty big assumption. With VLTA stock dependent on the EV rollout, prospective buyers should carefully weigh the pros and cons.