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.
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.
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%.
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.