San Francisco-based Volta (VLTA) develops and manufactures electric vehicle (EV) charging stations. I am bullish on the stock.
As an investor, your elected leaders can either help you or hinder you. For the long term, it's wise to position yourself to benefit from the dealings on Capitol Hill rather than try to fight an uphill battle against the government.
In the U.S., President Joseph Biden has made it crystal clear that he supports clean energy initiatives. As Russia's invasion of Ukraine puts upward pressure on petroleum and natural gas prices, the White House has an opportunity in 2022 to pursue its energy transition objectives, including the build-out of America's EV infrastructure.
Meanwhile, Volta has already been in business since 2010 and is aggressively commercializing its brand of faster, "smarter" EV chargers. After breaking down the Biden administration's ambitious goals for the nation's shift to cleaner fuel sources, investors can think about adding a few shares of Volta stock to charge up their portfolios this year.
A Rapidly-Growing NetworkIf you truly believe in buying when other traders are selling, then here's an opportunity for you. When Volta went public in August of 2021 after a SPAC transaction with Tortoise Acquisition Corp. II, the share price was fairly close to $10. More recently, Volta stock traded below $2.
Admittedly, early shareholders aren't faring well so far. This could present a chance to Buy a handful of Volta stock shares at a deep discount, though. If the company grows, your portfolio's value could grow, too.
So, what separates Volta's charging ports from the competition's offerings? Sure, Volta's chargers are built for speed and efficiency, but Volta isn't unique in this respect. Rather, the most significant differentiating factor is the visual appeal of Volta's "smart" EV chargers.
Volta's EV charging stations, according to the company, are "equipped with large digital display screens, are strategically located steps from the entrances of popular retail, grocery, and entertainment venues."
Hence, there are advertising/marketing opportunities beyond the EV charging experience here: "These premium placements influence consumers' shopping lists with eye-catching content presented on a sustainable medium within the uncluttered parking lot environment."
In other words, the customers probably aren't doing anything exciting while they're charging up their vehicles, so Volta can let them watch "content" (and, presumably, advertisements) while they wait. Regarding this, the numbers are impressive, as Volta's EV charger network "creates more than 900 million monthly impressions via 4,600+ digital ad screens in 39 Designated Market Areas (DMAs) across 26 states."
Don't be surprised, then, if you soon see a Volta charger serving up both an electric current and a slew of visual advertisements at a grocery store, convenience store, or shopping mall near you in the near future.
New Steps Toward a Cleaner PlanetIf you're not on board yet with Volta's vision of a vast network of visually dynamic EV charging stations, then take a glance at the company's financials. Perhaps the hard data may make you a believer.
During 2022's first quarter, Volta grew its revenue 77% year-over-year to $8.4 million. Also, within that time frame, Volta's total number of installed stalls increased 39%. Additionally, the company narrowed its net earnings loss from $65.2 million in the prior-year quarter to $48.1 million in Q1 of 2022.
Ideally, Volta wouldn't have a net earnings loss at all. However, it's not uncommon for EV-market businesses in the 2020s to still be in the process of working toward profitability. Therefore, investors should be patient, as Volta is at least improving in this area.
Of course, it's much easier to be patient when a company has the backing of the U.S. government. This month, the White House announced "new steps" to establish a network of 500,000 EV chargers as part of the Bipartisan Infrastructure Law. In total, that law allocates $7.5 billion for EV charging infrastructure in the U.S.
The announcement seems to suggest that the half a million EV charging ports will be distributed across all 50 states, as it specifies, "The new standards will ensure everyone can use the network –no matter what car you drive or which state you charge in."
Of the earmarked $7.5 billion, the National Electric Vehicle Infrastructure program will provide $5 billion to U.S. states to "build out charging infrastructure along highway corridors." Apparently, the other $2.5 billion will include grants to "support community and corridor charging" while also supporting "EV charging access in underserved and overburdened communities."
Wall Street's TakeTurning to Wall Street, VLTA is a Moderate Buy based on three Buys, three Holds, and one Sell rating assigned in the past three months. The average Volta price target is $4.71, implying 186.3% upside potential.
The TakeawayAs the government commits billions of dollars to build out a vast EV charging station network, Volta stands to benefit as a premier provider of "smart" chargers. The company isn't profitable at the moment, but that issue could be solved in due time as the White House offers robust financial support for America's EV infrastructure.
With all of that in mind, risk-tolerant investors can consider holding a few shares. It's an interesting way to wager on the long-term expansion of a niche industry with the backing of a powerful partner, the U.S. government.
Activision Blizzard (ATVI) is best known as a developer and manufacturer of video games. I am bullish on the stock.
Video game stocks thrived during the onset of the COVID-19 lockdowns in 2020, as people spent their time engaging in digital battles and adventures. Among the beneficiaries of this trend was Activision Blizzard, which is famous among gamers for such titles as Diablo, Crash Bandicoot, World of Warcraft, Candy Crush, Overwatch, and of course, Call of Duty.
These aren't just game titles; they're iconic franchises to gamers around the world. Yet, the COVID-19 lockdowns are now mostly lifted, and gaming companies like Activision Blizzard must prove to Wall Street that their businesses are still viable as the video-game market becomes an increasingly crowded field.
That's a tall order, but Activision Blizzard should be up to the task. As we'll discover, the company is expanding into a field with applications far beyond the gaming realm - and besides, a legendary investing guru is accumulating a sizable stack of shares.
A Quickly Moving TechnologyActivision Blizzard has been mostly directionless in 2022 so far, but it has held up fairly well considering the technology-stock rout that's been in progress. The stock has managed to stay in the $70s lately, and long-term investors can target the 52-week high of $96.15 as a good place to consider taking profits.
Regarding the company itself, an Activision Blizzard subsidiary business just made a move that could have implications in the gaming world and beyond. If you're bullish on machine learning in the 2020s, then you'll definitely want to take note of this recent development.
To provide some background info, Activision Blizzard acquired interactive entertainment company King in 2016. With 250 million monthly active users as of 2022's first quarter, King has game studios on multiple continents and has developed more than 200 games.
Now, Activision Blizzard's subsidiary has a subsidiary. Reportedly, King has acquired Peltarion, a Swedish artificial intelligence (AI) software company. Peltarion has helped a number of companies, and even NASA and Harvard University, benefit from AI.
In other words, Activision Blizzard is now indirectly involved in AI, which is an essential component of modern video games but could also have other applications. Could this acquisition signal a broadening of Activision Blizzard's business model?
That's entirely possible, but for now, King and Peltarion apparently plan to apply AI to the gaming segment. To quote King President Tjodolf Sommestad, "Machine learning technology is moving quickly, and by increasing our investments in this field, we expect to deliver even more creative content to our 250 million monthly players... [in Q1 2022] across the globe."
Buffett Ups the AnteAnother notable development with Activision Blizzard is that one of the world's most successful investors is taking, and even raising, a stake in the video game maker. He's not a technology guru, but he sure knows a good value when he sees it.
Berkshire Hathaway (BRK.A, BRK.B) CEO Warren Buffett seems to like Activision Blizzard stock in 2022, as Berkshire has reportedly increased its stake in Activision to roughly 9.5% since the start of the year. Amazingly, it's been estimated that Berkshire has purchased around $4.5 billion worth of Activision shares in 2022 so far.
Why would Buffett favor Activision Blizzard stock? He doesn't seem like a video game wizard, but he likes value stocks, and Activision's trailing 12-month P/E ratio is quite reasonable at 23.7. Buffett also likes dividend stocks, and Activision pays a forward annual dividend yield of 0.64%.
It's been suggested, though, that Buffett has another reason for upping the ante with Activision Blizzard stock. In particular, Buffett might anticipate that Microsoft's (MSFT) deal to buy out Activision for $95 per share will go through. This is an interesting bet to make since, apparently, there's been some pushback from U.S. lawmakers regarding the proposed Microsoft-Activision transaction.
Really, there's no way to know for certain what Buffett thought when Berkshire ramped up its holdings in Activision Blizzard. Was he only thinking about the Microsoft-Activision going through? This might or might not pan out, and Buffett isn't known for recklessly gambling on stocks without a firm basis. Most likely, he carefully researched Activision Blizzard as a business and determined that it's currently undervalued by the market.
Wall Street's TakeTurning to Wall Street, ATVI stock comes in as a Moderate Buy based on five Buy ratings and three Hold ratings. The average Activision price target is $95.63, implying 28.1% upside potential.
The TakeawayThe idea here isn't to just load up on Activision Blizzard shares because Buffett and Berkshire took a position. Rather, investors should conduct their own due diligence and determine for themselves whether Activision deserves a place in your tech-stock portfolio.
At the very least, we can say that the shares are trading at a reasonable valuation, and Activision Blizzard does pay a dividend. Besides, Activision is indirectly venturing into the high-conviction world of AI, which suggests a possible broadening of an already dynamic business model. So, don't hesitate to be like Buffett and consider taking a long position in Activision Blizzard stock.