SPACs continue to bamboozle: Stock chopped, low on cash, layoffs underway, turns to Volta after government subsidies for EV charging stations

The model of “growth at all costs” has been dumped.

By wolf richter For wolf street,

Volta Inc., which went public through a merger with a SPAC last August, sells EV charging stations with large billboard-like media screens that allow people to view ads while waiting for their vehicle to charge Is or forces. Media screens also face passersby, and therefore have more eyeballs.

The company earns revenue from selling advertisements on its EV charging network and these billboards. But not much: It’s notorious for losing $276 million last year on $32 million in revenue, based on the unassailable Silicon Valley strategy of “growth at all costs”. In 2021, its revenue is set to increase by $13 million; And its losses grew by $206 million. you get the idea. That kind of development model.

Headquartered in ultra-expensive San Francisco, it spent nearly $100 million in cash in Q2, at the end of which, it had $105 million in cash left on its balance sheet. There isn’t much runway at this cash-burn rate. Earlier this month, it filed a prospectus with the SEC for a “to the market” stock offering to raise up to $150 million by selling shares “from time to time.” Which will be a slog of sorts because shares are down 89% from their post-SPAC-merger intra-day low of $14.34, and up 88% from their closing high of $13.04, which has given the company an absurd $2 valuation. Given market cap. Billion – up to $1.55 today on Sep 19, 2021 (via data) about a year ago YCharts,

In March, the company announced that CEO Scott Mercer had resigned but would stay on for a transition period, and that President Christopher Wendell had resigned “effective immediately”. Both resigned as board members, “effective immediately.” that kind of company.

But now all kinds of new things are happening.

#1, The “Growth at All Costs” model has been dumpedAnd it’s time to cut costs and lay off people, and reduce “outside consultants” and consolidate “its three San Francisco offices into one,” and cut “marketing and administrative costs.”

As part of these cost cuts, the company announced today It will later lay off 10% of its full-time employees, after already laying off 18% of its full-time employees “through other workforce reductions and biological attrition” since June 1.

Volta is “taking difficult but important steps to align the business with current market dynamics and position the company for long-term success,” it said.

#2, the company cut its revenue guidance for the third quarter by nearly 20% to a range between $13.5 million and $14.5 million. And it retracted its full-year guidance, alleging: “The advertising environment, particularly automotive brand inventory constraints, delayed ad spending; limited power transformer availability affecting DC fast charger installations; and the impact of the Q4 shopping season on construction availability on commercial properties. It didn’t defy the stronger dollar — unlike most of its bigger brothers — which would have been a hoot.

The thing is, the “growth at all costs” model works great if you have enough cash on hand to pay all the costs forever. But if you run out of cash, not only is the development over, but the whole show is over and everyone goes home. And now the cash is getting low, and it’s time to pivot, like, to a new model… and you know what’s coming.

#3, Congress threw away billions of dollars In all directions, including some of the companies building EV charging networks, and so Volta announced today that it’s scrambling to get a piece of the federal pie.

In its announcement, under the section titled “Competing for Federal Funds,” the company said its “dedicated team is well positioned as a public-private partner for state and federal government funding.” It said it “intends to continue to give priority to EV charger installations that qualify for government-provided funding.”

It is looking to “leverage” its infrastructure planning software PredictEV, it said: “By analyzing multiple data sources, including local economic and equity data, PredictEV identified more than 8,200 EV charging stalls signed up or master service within the company’s pipeline.” may identify the places covered under the Agreements (MSAs) that meet the requirements of Govt.

Sure, but everyone and their dog has been setting up charging stations for years, Tesla down, and they’ll be competing for federal subsidies. California alone already has 79,000 charging stations, compared to 7,572 gasoline stations, according to the EIA. Everyone is going after it. The small parking lot at the Walgreens in my neighborhood has had them for many years.

It’s not that Volta invented anything new. What’s new with Volta is that its charging stations have media screens that show advertisements. And the government doesn’t care about it.

When all else fails, try feeding from the government’s big trough,

Corporate America has been doing this for a long time. This includes the richest semiconductor makers such as Intel and Nvidia, and even foreign companies with a presence in the US, which are currently receiving $52 billion in federal subsidies at the bottom of the trough. So compared to them, whatever piece Volta can get, if any — squeezed between the big charging-station companies — will be tiny, but they get the money in the door sooner, or else the show is over and Everyone Goes home.

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