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Polestar Stock – An EV Stock To WatchPolestar (NASDAQ:PSNY) has established its reputation as an EV manufacturer, however its entrance into the EV market via a SPAC earlier this year resulted in a slow decline for PSNY stock. The company’s Q3 results temporarily buoyed the stock thanks to its first profit as a public company and management’s confirmation that it is on track for 50,000 deliveries by EOY. Although Polestar stock is currently downtrending, the stock could have another run up with its Q4 earnings in February 2023. Over the long term, PSNY appears to be a strong contender in the EV space. Polestar Stock News In June 2022, the Polestar stock IPO took place valuing the company at $18.6 billion. Given the bearish sentiment surrounding EV SPACs and the overall market environment, PSNY stock has steadily lost value since its IPO. However, in 2023 Polestar’s situation could improve thanks to improving supply chains, the release of the Polestar 4 SUV coupe, and deliveries of its other EV models. EV manufacturers have been particularly impacted by semiconductor shortages and PSNY is no exception. Polestar was forced to adjust the features of its Pilot Pack for all markets except the US and Canada. PSNY plans to retrofit vehicles missing the hands-free tailgate foot sensor starting the 49th week of 2022. Despite this setback, Polestar has remained largely on track due to its major shareholders Volvo and Geely. Compared to other EV manufacturers, PSNY was able to ramp up production and maintain its schedule with fewer problems. This is a bullish sign considering that Polestar’s production was negatively impacted by Shanghai lockdowns in 2022 . In fact, Polestar’s biggest obstacle has been shutdowns in China that led the company to cut its expected deliveries for the year. China’s Covid policy will have a smaller impact on Polestar starting next year since production of the Polestar 3 and 4 will take place at Volvo’s facility in South Carolina. Both Geely and Volvo have committed to increasing EV production on a large scale. Volvo plans to become an all-electric car manufacturer by 2030 while Geely plans to make 50% of all its car sales electric by 2023. Since both companies are major shareholders in PSNY, Polestar will have the opportunity to tap into their resources and supply chain networks as it continues to expand. So far, PSNY has not been impacted by rising battery costs due to its contract terms with Volvo. However, Polestar has recognized the need to maintain and grow its access to battery cells which is why it plans to develop and manufacture its own in the future. In the meantime, one of its lithium-ion battery suppliers – LG Chem – has signed a MOU with Snow Lake Lithium (LITM) to establish a domestic supply chain of lithium in North America once production begins in 2025. In the meantime, investors bullish on PSNY stock believe that it will eventually benefit from the favorable landscape for EV manufacturers created by current legislation. According to Polestar’s management, it’s unlikely that its customers will benefit from the Inflation Reduction Act due to their combined yearly income, however other legislation like the Build Back Better Act and laws passed in California banning the sale of gasoline-powered vehicles by 2035 could be long-term catalysts for the stock. On this note, charging stations are becoming increasingly important as demand for EVs rises. Polestar could attract more customers tired of high gas prices thanks to its partnership with Electrify America which provides 2 years of free charging sessions to new and existing 2021 and 2022 Polestar 2 customers. This and other features make Polestar’s vehicles strong competitors in the EV market. For example, PSNY launched its latest model – the Polestar 3 – in October 2022 . With an MSRP of $85,000, this model appears competitively priced compared to other high-end EVs and offers features such as an EPA range of 300 miles and the ability to go from 0-60 mph in 4.7 seconds. Since Polestar is targeting the same audience as the Porsche Taycan, Tesla Model S Plaid, and Lucid Air, it’s important to compare its features with these other high end EV models. In comparison to the Porsche Taycan, the Polestar 3 has a lower MSRP and better mileage. Although the Taycan goes from 0-60 mph almost 1 second faster than the Polestar, it appears to be a competitive option. On the other hand, the Tesla Model S Plaid is roughly $49,190 more in terms of MSRP but offers an EPA range of 348 miles and goes from 0 to 60 mph in only 2 seconds. The Lucid Air is also significantly more expensive than the Polestar 3 with an MSRP of $139,000 and EPA range of 469 miles. With time, Polestar may expand its lineup, offering additional features which would increase the MSRP. But for now, the Polestar 3 is a less expensive but still high-end EV model. Another advantage PSNY offers is its industry experience. Other EV manufacturers like LCID and RIVN have announced mass recalls as they start getting production off the ground. Unlike other EV startups, PSNY spent years producing cars with Volvo and has had only 2 recalls so far. Looking to the future, investors will be watching how well Polestar’s vehicles compete against manufacturers like Tesla. It appears that PSNY is positioning itself for growth in the autonomous vehicle market as well as for future modifications to its vehicles thanks to the software-defined architecture of the NVIDIA DRIVE platform. This chip is installed in the Polestar 3 and will help the company make over-the-air updates to its vehicles. However, PSNY could face stiff competition from traditional OEMs like Ford Motor and General Motors which are targeting the EV market with their considerable spending power. Merrill Lynch’s “Car Wars” study shared its prediction that Ford Motor and General Motors will squash Tesla’s market share by 2025. Even with the backing of Geely and Volvo, Polestar is no competition for these massive companies. Instead, PSNY may find its niche as a high-end EV manufacturer. Although several companies are competing for market share in this space, those with weak fundamentals could fall to the wayside as inflationary pressures continue to affect demand and prices. PSNY Stock Financials Although PSNY slightly beat Q3 EPS estimates, the company missed revenue expectations. Luckily, PSNY surprised analysts with $4 million in gross profits. Thanks to shareholder financing and $988 million cash balance, Polestar believes that it has the cash runway for maintaining operations in 2023. As is, Polestar is working towards ending 2022 with $2.4 billion in revenue. So far, PSNY has increased its gross profit from $1 million during the nine-month period of 2021 to $57 million for the same period in 2022. The total cash used for operating activities over this nine-month period totaled $1.02 billion, partly due to a $372 million one-time listing charge. Additionally, PSNY’s research and development expenses over the nine months of 2021 dropped 21% from $157 million to only $123 million this year. Technical Analysis The PSNY stock price is currently $4.77 after Polestar stock fell 41% following its earnings run up. Prior to its positive earnings report, PSNY stock was trading in a channel between its support at $4.11 and $4.68 resistance. The stock broke through and touched $8.23 on its earnings report – a roughly 98% run. As is, PSNY stock is testing its support at $4.68 – partially filling an earlier gap up – and could drop down to $4.11 or lower with potential insider selling. Since the share lock up agreement has only recently expired, there is a chance that insider selling will push PSNY stock price down. However, for investors bullish on PSNY stock this could offer a low entry price ahead of the catalysts in store for PSNY in 2023. Looking at the indicators, the RSI has recently rebounded from oversold and is holding at 46. The MACD is currently bullish to the downside and accumulation continues to decrease following the Q3 earnings report. Strong consolidation could signal the end of the downtrend and offer a possible entry point for investors looking to take a starter position. However, its worth noting that PSNY has only recently become a publicly reporting company and will need to prove its value to shareholders over the coming quarters. If it is able to show continued progress in 2023, that could trigger a rebound for PSNY stock. The most recent analyst price target for Polestar stock comes from Itay Michaeli from Citigroup who gave it a buy rating in November with a $12 price target. Polestar Stock Forecast Considering the improving supply chain system, easing Covid restrictions in China, and rising demand for EVs globally, the Polestar stock forecast for 2023 appears positive. Polestar has performed well in terms of production and orders despite many headwinds this year. If the company was able to overcome these hurdles, then it may be able to accomplish even more in 2023 as conditions affecting its production improve. Right now, PSNY is working double time to meet orders and Q4 is expected to meet expectations. In addition to new orders in 2023, Polestar will be producing 65,000 cars for Hertz and Uber over the next five years. Securing such a large order from these companies demonstrates the potential many see in Polestar moving forward. While demand may not be an issue at the moment, one risk to the Polestar stock forecast is consumer spending. Fears of a recession and inflationary pressures have affected consumer spending and could impact demand for Polestar’s models. As is, PSNY’s target audience is less likely to change its spending habits, however, if Polestar’s orders appear to decline in the coming quarters this could be an issue for PSNY stock. Setting this aside, PSNY is on track to release the Polestar 2 all-electric fastback in 2023 as well as the Polestar 4. The company has reiterated its plans for three product launches over the next three years and has set an ambitious goal for 290 thousand EV sales by 2025. These goals present significant upside potential for PSNY stock which has given up much of the ground it gained from its Q3 earnings. The share lockup period for PSNY stock is set to end in December and insider selling could push the PSNY stock price down further – offering a better entry price for investors bullish on PSNY stock.
NASDAQ:PSNY
by Penny_Stocks_Today