Proterra Stock: Long-Term Bull Thesis Stays Intact (NASDAQ:PTRA)
With deliveries to nine different OEMs across a variety of vehicles, management noted strong underlying demand. I still recommend purchasing Proterra (NASDAQ:PTRA). My opinion on PTRA has not changed since I first wrote about it; rather, this piece serves as a continuation of the thesis in light of the company's 3Q22 earnings report. My assessment is that investors can still expect a positive IRR from the current valuation. In light of persistent supply chain difficulties, especially in its Transit division, management has reiterated revenue expectations of $300-325 million, or 24%-34% growth. As vacations and plant shutdowns for the end-of-year inventory count are factored into the forecast, I believe it is likely that sequential sales will be flat or slightly lower than in the third quarter. This is something to note as it might cause further short-term stock volatility. Something positive to note is that since the first phase of the Powered 1 facility is nearly finished, the business has reduced its capex guidance to $70 million. I am confident that demand for battery-electric commercial vehicles will continue to rise beyond FY22, this is especially due to the large awards of public spending, such as the estimated $800 million yearly award under the Bipartisan Infrastructure Act through 2026. In addition, there were a total funding requests of over $4 billion submitted to the EPA for the inaugural year of the Clean School Bus Program, which I dare say it is good news as there were 2,350 electric school buses that received nearly all of the funds. Furthermore, the deadline for spending these funds is April 2023, which means there will be demand and PTRA is well positioned to capture it. In addition, starting in 2023, the Inflation Reduction Act is projected to provide even greater amounts of funding for commercial vehicle electrification, such as a per-vehicle credit of up to 30% of a new Class 4-8 electric commercial vehicle.