Volta (VLTA) stock zoomed this morning and rallied 13.2% within minutes of the market's opening before cooling off a bit. As of 1:30 p.m. ET Monday, shares of the electric vehicle (EV) charging infrastructure company were still trading 7.3% higher.
Volta filed for a mixed securities shelf offering worth $500 million today, which means the company can sell a variety of securities, including common stock, over time to raise that amount of funds. Although any issue of common stock is dilutive for existing shareholders, investors are optimistic about Volta's move.
Volta said it'll use any proceeds from a security sale for "general corporate purposes." That doesn't say much, but any money right now matters for a company facing a cash crunch.
In its second quarter, although Volta's revenue surged 121% year over year to $15.3 million, it incurred a net loss of nearly $37.5 million, which was almost 82% higher year over year.
Even more worrisome, Volta had a term loan worth $32.7 million as of June 30. Given its dire financial position, Volta, in its Q2 regulatory filing, stated that "there is substantial doubt" about the company's "ability to continue as a going concern" in the coming 12 months.
In short, Volta's mounting expenses and losses have pushed the company into a liquidity crisis, and the company will have to raise funds to continue its operations and grow. Volta has acknowledged that a failure to raise additional money could force the company to "significantly curtail its operations, modify strategic plans, and/or dispose of certain operations or assets."
At a time when the EV industry is booming, and charging infrastructure stocks are growing exponentially, Volta is struggling to meet costs and generate any cash flows. Volta stock has plunged almost 70% so far this year.
The bigger reason why Volta lost favor with EV investors is that it's less of an EV charging stock and more of a media stock given that the company generates the bulk of its revenue from advertising on its media-enabled EV charging stations. That doesn't leave much room for the company to take advantage of industry growth, especially upcoming opportunities under the Inflation Reduction Act.
Yet Volta's move to raise money -- even if its dilutes shareholders' wealth -- appears to have reignited some investors' hopes in the stock.