Please ensure Javascript is enabled for purposes of website accessibility

Why Tortoise Acquisition II Stock Dropped 14.1% in March

By Howard Smith - Apr 6, 2021 at 3:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The special purpose acquisition company announced a merger deal in February, leading to a spike in the stock that faded into March.

What happened

Shares of special purpose acquisition company (SPAC) Tortoise Acquisition II (SNPR) are currently trading almost exactly where they started the year. But they hardly went in a straight line. The stock was up more than 60% in February after the SPAC announced it has plans to merge with electric charging network company Volta. The deal valued the combined company at over $2 billion, and investors jumped in. But a rotation away from aggressive, and speculative, electric vehicle-related companies into more cyclical names followed that spike, and shares dropped quickly. In March, that trend continued, with shares down 14.1% for the month. 

So what

The merger announcement was made on Feb. 8, 2021, which is when the stock peaked at over $17 per share. Volta will receive about $600 million in net proceeds from the deal, helping the company to grow its charging-network business. But since then, shares have been on a downtrend to under $11 per share, bringing the valuation of the combined company back close to the level of the transaction, which was based on a $10 per share SPAC price. 

Car plugged into a Volta charging station on a retail shopping plaza, with a large screen showing advertising.

Image source: Volta.

Now what

Volta works with advertisers and owners of retail and shopping center locations to place its chargers, which double as ad platforms with interactive display screens. This gives the company additional advertising revenue to boost returns. Volta says its retail partners also benefit as its chargers attract more highly engaged consumers that spend more time shopping. It says users average 92 minutes on the chargers, and that time is spent shopping at partner properties. For advertisers, the advantage is a last-minute opportunity to engage consumers as they begin to spend. 

But there is also much competition in the charging space, and stocks have declined across the board as investors transferred money toward more reopening and value names. Since Tortoise Acquisition II announced its combination with Volta, shares of several charging-network names have dropped anywhere from 17% to almost 40%. 

SNPR Chart

SNPR data by YCharts.

The electric-vehicle market is still just beginning, and related industries like charging networks have much potential growth ahead. But it's too early to know which network will be most successful, or whether some will ultimately fail. Investors were reminded of that fact as the sector lost favor, at least temporarily. Any investment in the sector should still be considered part of a speculative section of a portfolio. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tortoise Acquisition Corp. II Stock Quote
Tortoise Acquisition Corp. II

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.