Please ensure Javascript is enabled for purposes of website accessibility

Why EV Stock Volta Soared by Double-Digits Today

By Neha Chamaria – Updated Nov 12, 2021 at 3:23PM

Key Points

  • Volta generates most of its revenue from advertising, not EV charging.
  • The company expects a strong finish to 2021, even though it will install fewer new charging stalls this year than it had previously forecast.

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

Volta delivered a strong third-quarter report, but the headline metrics don't tell the full story.

What happened

Electric vehicle (EV) stock Volta (VLTA -0.30%) got charged up on Friday, trading 13.3% higher as of 3:03 p.m. EST. With that jump, Volta is on track to end the week up by more than 30%.

While several EV stocks have sizzled this week in the wake of Congress passing President Biden's $1.2 trillion infrastructure bill the bumper debut of EV start-up  Rivian Automotive, Volta in particular caught investors' attention Friday by delivering a stellar quarterly earnings report. Dig deeper, though, and you might begin to question the rally in Volta's share price. 

So what

Volta builds and operates EV charging stations equipped with screens  that can be used to display advertising. In fact, it looks more like a media stock today, given that it derives the bulk of its revenue from delivering advertising content across those displays. In the third quarter, for example, Volta's "behavior and commerce" segment brought in almost 87% of its total revenue of $8.5 million.   

Two persons appearing confused while studying stock price charts on computer screens.

Image source: Getty Images.

Yet there's no denying this business is growing rapidly -- revenue from the segment more than tripled year over year in Q3. By comparison, revenue from network development slumped by 47% as fewer customers purchased Volta's charging products. 

Overall, Volta's total revenue soared 77% year over year in Q3, but it still generated a huge net loss of $43.1 million as expenses surged. In the prior-year period, it booked a loss of just $14.5 million. Management pointed to one-time items like bonuses, commissions, stock-based compensation, and professional fees as the primary drivers of those higher expenses.

Now what

Volta's share price gains are partly being driven by the market's EV mania -- investors right now are drawn to any company that has anything to do with electric vehicles. To be sure, Volta is expanding its charging network aggressively, and that's essentially what investors are betting on. However, the company is falling short of its own guidance. 

Volta added 168 charging stalls in the third quarter and had a total of 2,137 stalls as of Sept. 30. By the end of the year, it says it expects to have between 2,300 and 2,500 stalls installed, with another 1,300 or more under construction. Back in June, though, Volta projected it would end the year with a total of 3,142 stalls. 

The market isn't paying much attention to that shortfall, though. Instead, it appears to be focusing more on Volta's projected full-year revenue range of $32 million to $36 million. That guidance implies that the company will generate at least $11.8 million in revenue in the fourth quarter, which is significantly more than it brought in during Q3. So investors are purely betting on this EV stock's revenue growth, wherever it might come from.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

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