Polestar (PSNY) stock debuts on Nasdaq after SPAC merger

Polestar Shares made its public market debut under the symbol “PSNY” on Friday, making it the latest electric vehicle maker to go public via a merger with a special purpose acquisition company, or SPAC.

Polestar shares began trading on the Nasdaq stock exchange a day after completing its merger with SPAC Gores Guggenheim. Shares of the electric vehicle maker began trading Friday at $12.98, up 15.5% from the final SPAC closing price on Thursday, but sold off in the morning. As of noon ET, Polestar shares were down about 3% from Thursday’s close.

Polestar CEO Thomas Ingenlath said the company would use the approximately $850 million raised from the deal to fund its three-year plan to build new vehicles and eventually become profitable.

But Ingenlath said Polestar, which started as a joint venture between Sweden’s Volvo Cars and Chinese auto giant Geely in 2017, has progressed beyond startup status.

“We go public as a successful, operating business — not to raise capital to start a business,” Ingenlath told CNBC in a recent interview. “It’s because the next three years will be lightning-fast growth, the company is prepared for that with the product portfolio.”

SPAC deals have become a more popular way for companies to go public in recent years. The information required is simpler than that of a traditional initial public offering. Unlike a traditional IPO, companies participating in a SPAC merger are allowed to present forward-looking projections to investors, which can help justify a high valuation. But there is no guarantee that these forecasts will come true.

So far, most SPAC mergers with electric vehicle companies have not worked out well for investors. Even the relatively more successful cases of Lucid Group, Fisker and Nikola are currently trading 67%, 69% and 92% below their post-merger highs, respectively. Electric truck maker Rivian, which went public via a traditional IPO, has also struggled. Its shares are down 84% from its post-IPO peak.

But Polestar could have several advantages over its competitors. Volvo Cars still owns 48% of the company, and Polestar already has more than 55,000 vehicles on the roads in China, Europe and the United States. It has an operational factory in China and an assembly line that is expected to begin production later this year at a South Carolina plant shared with Volvo.

Over the next three years, the company plans to add three vehicles to its current model, the China-built Polestar 2 compact crossover. Additions are a large SUV, the Polestar 3; a midsize crossover, the Polestar 4; and a large sedan, the Polestar 5, which is intended to be the brand’s flagship vehicle.

All will be fully electric and all will be offered in the US, Europe and China. Polestar plans to build its vehicles in all three regions. By the end of 2025, Ingenlath expects Polestar’s three-year roadmap to take the company to annual sales of around 290,000 vehicles.

Ingenlath said Polestar may need to raise more cash before it becomes profitable – a milestone he expects to reach before 2025. If so, he said the company would likely issue bonds rather than to sell more shares.

So far, Ingenlath said, the company’s plan is on track. It has received more than 32,000 orders for the Polestar 2 so far this year, with those orders coming from 25 different countries. Polestar has also received an order from car rental giant Hertz for 65,000 vehicles over the next five years, a deal which Ingenlath says is primarily aimed at giving consumers the chance to try out the company’s electric vehicles. .

Polestar’s plan is to operate sales and service networks in 30 countries by the end of next year, but Ingenlath said the company is likely to reach that milestone sooner.

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