What happened
Shares of Volta (VLTA) cracked under intense selling pressure today and ended Wednesday down 10.2%.
Shares of the electric vehicle (EV) charging company received a price cut today, and while the analyst still sees almost 145% upside in Volta stock from Tuesday's closing price, the market isn't convinced.
So what
Financial services firm Cantor Fitzgerald cut its price target on Volta to $6 per share from $8 amid the company's liquidity concerns.
Image source: Getty Images.
Last week when Volta announced its quarterly numbers, it also said something shocking in a separate regulatory filing: Having prepared its financial statements as of March 31, management concluded "that there is substantial doubt about the company's ability to continue as a going concern in the next 12 months" given its financial standing.
To put that into context, Volta ended March 31 with cumulative losses of $476.9 million and a cash balance of only $205 million.
Now what
Volta is burning through cash rapidly, and its cash balance is not sufficient to support existing operations as well as expansion. In short, it is facing a cash crunch that might only get worse.
There's another concern investors have to worry about now: the chances of Volta stock being delisted. As per listing rules on the New York Stock Exchange, Volta's stock price should ideally be around $4 per share for it to meet market capitalization requirements to remain listed.
Volta's stock has plunged almost 70% year to date, and is hovering around $2.25 per share, as of this writing.
So even though Cantor Fitzgerald still expects Volta stock to nearly triple in the next 12 months, the market isn't convinced, especially since Volta is less of an EV stock and more of a media stock. The company derives the bulk of its revenue from advertising on the EV charging stations it installs. Meanwhile, EV manufacturers themselves that are jumping on the charging bandwagon are proving to be a real threat to Volta.
