Why Shell’s Acquisition of Volta Tanked EV Charging Company Stocks
In a continuing trend of bucked norms in the automotive industry and the EV market in recent times, from weird prices to weird gas prices to, weird everything, here is some more. Wall Street decided that not only would charing company Volta suffer for getting bought by Shell for $169 million, but the entire EV charger market would suffer for it, too. So, why—or, rather, how—did the market tank EV charger companies on Thursday, only to allow them a start to a slow recovery on Friday?
Wait, an Oil Company Wants to Buy an EV Charging Company?
It may seem odd and even counterintuitive that an oil and gas company would want to purchase an EV charging company. Shell’s bread and butter is fossil fuels, so why support the thing that’s trying to eliminate its cash cow? Well, these companies aren’t just going to let an opportunity to keep their businesses alive while also bringing in new customers go to waste. Shell isn’t even the first oil and gas company to do this; it has been a trend since EVs started gaining traction. No matter what a fan of dino squeezin’ will tell you, your local gas station and the jobs that are related to most of it won’t be going away.
The shock—no pun intended—was the pennies-on-the-dollar price that Shell is acquiring Volta, Inc. for, according to Reuters. In an all-cash deal, Shell USA, Inc.—the actual division of Shell that is buying Volta—will snap up all the outstanding shares of Volta common stock for only $0.86 apiece, which works out to a value of only $169 million. That’s a number that a Powerball Jackpot winner could purchase the stock for, at least at time of publication. The lowish figure sent a major shockwave through Wall Street—because that put Volta’s valuation at less than nine percent of its worth just 17 months ago.
The Wall Street Drop
While you’d expect that this news would affect just Volta and Shell, Wall Street isn’t so simple. Just after the Volta news broke, EVgo, ChargePoint, Blink, Wallbox, and even Shell itself saw their stock prices fall. Plug Power was the worst hit and is still crawling to recovery, having started out on January 18 at $17.84 per share on NASDAQ before dropping to $16.70 when markets opened Thursday the 19th and later fallling low as $15.18 per share. While it started to recover, Plug Power’s stock was down 3.40 percent in its five day performance at the time of this writing. According to Silicon Valley Business Journal (subscription required for reading), ChargePoint and EVgo shares fell by more than 10 percent on the New York Stock Exchange, while Blink Charging fell by more than 7 percent. Ironically, only Volta gained any ground, its five day performance a positive 45 percent going from a low of $0.60 a share at the start to a high of $0.91 per share and currently at $0.88 at the time of writing.
So, why did the whole EV charging market take it on the chin not just the two players? According to that same story in Silicon Valley Business Journal, it’s because the Volta valuation served as a glaring reminder that most of the EV charging market remains unprofitable. This is not new, and that has been reflected in ChargePoint’s stock price performance over the last year, which fell 25 percent. EVgo’s closing price on Thursday was a third of its value when it went public in 2021.
It does look like the market is starting a slow recovery from Thursday’s hit. At the time of writing ChargePoint gained back and was at $10.96, EVgo was back up to $5.34 per share, and—while it started the day lower than it closed on Thursday—Shell was climbing back up from its $58.49 start to $58.74. Until EV charging becomes more of a moneymaker, or more necessary as more EVs hit the road, don’t expect Wall Street to warm up to charging providers anytime soon—whether or not more acquisitions happen.
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