Volta (VLTA) is an owner and operator of electric vehicle (EV) charging infrastructure. The company differentiates itself by partnering with retailers and landlords who utilize its charging stations as an advertising medium. The company went public through a business combination with a special purpose acquisition company (SPAC) in August 2021. After raising less than expected from the merger, Volta is now having to satisfy certain obligations for early investors. That is causing the stock to plummet today. As of 2:50 p.m. EDT, Volta shares were down 22% on the day.
To satisfy obligations to certain shareholders, including early private placement in public equity (PIPE) investors, Volta has registered an additional 116 million shares for these stakeholders to sell.
The more than 116 million newly registered shares includes common stock as well as shares issuable upon exercise of public warrants. Should all shares be issued, it would represent a more than 70% increase in the outstanding common stock share count, significantly diluting existing shareholders.
In its Securities and Exchange Commission (SEC) filing, Volta warned investors that "The sale of these shares is likely to have an adverse effect on the trading price of the Volta Class A Common Stock." Today, the news is already causing an adverse effect on the trading price on extremely heavy trading volume.
This highlights a risk involved when young companies are taken public through SPACs. Existing shareholders also should have a long-term mindset as the company's future success depends on growth in the EV and EV charging network sectors. The business itself wasn't affected today, but its valuation was in the short term. Investors that continue to hold should monitor the situation to see if the niche of using an EV charging station with a screen for commercial advertising sets Volta apart from competitors.