Who would have ever thought that investors would get this excited about infrastructure?
Over the weekend (as you've probably heard by now), the U.S. House of Representatives finally passed President Biden's $1 trillion infrastructure bill -- the same bill the Senate approved back in August. Renewable energy stocks are up in response, and in particular, stocks that investors believe should able to capitalize on new federal funds to help build electric vehicle (EV) charging stations. As of 2 p.m. EST:
- Lithium miner Lithium Americas (NYSE:LAC) is up 9%.
- Rechargeable battery module maker Romeo Power (NYSE:RMO) is tacking on 12.4%.
- And Arbe Robotics (NASDAQ: ARBE), a maker of 4D imaging radar chipsets for autonomous vehicles, is powering ahead 14.5%.
Of these three companies, only one had actual stock-specific news to report today. Specifically, Arbe Robotics announced that the former chief financial officer of TIBA Parking Systems, Karine Pinto-Flomenboim, will become its own new CFO. But while I've no reason to believe Pinto-Flomenboim will be anything other than a fine accountant for Arbe ... memos from HR aren't ordinarily the kind of news that inspires a 14.5% spike in stock price!
On the other hand, all three of these stocks are directly tied into the potential for America to put more battery-powered and/or autonomously driven electric cars on the road. But here's the thing:
Out of the $1 trillion (and some analysts even say $1.2 trillion) in new infrastructure spending contained in the bill just passed, only a bare sliver -- $7.5 billion, or less than 1% -- is being directed toward the growing of EV charging networks.
That hardly seems like a big enough sum to justify all the spiking EV-related stock prices we're seeing today on Wall Street.
Arguably worse news for investors is the fact that the House finally had to decouple the president's hoped-for $1.75 trillion reconciliation bill from the $1 trillion infrastructure bill, in order to get the latter passed at all. This suggests that chances for eventual passage of the bigger bill are now even worse than they already looked prior to Friday's news -- and that larger bill, by the way, was said to include in excess of $500 billion in spending for "clean energy tax credits for rooftop solar, electric vehicles, clean energy production ... and investments in clean energy technology and manufacturing."
Long story short, in exchange for getting passed a bill with $7.5 billion in funding for "EV stocks," investors may have lost a chance of getting passed a bill with 67 times more funding for the same thing. That's a net loss in my book -- and not a great reason to be buying EV stocks today.