Polestar SPAC Merger Makes Gores Guggenheim Stock a Hot Item

Ready to add an intriguing special purpose acquisition company (SPAC) to your watch list? This one’s called Gores Guggenheim (NASDAQ:GGPI), and GGPI stock may have big upside potential.

A photo of an electric car with the charger plugged in.
Source: Nick Starichenko/InvestorPlace.com

Gores Guggenheim is reverse-merging in the near future with a Swedish electric vehicle manufacturer. My research didn’t come up with an exact date for the upcoming transaction, but the wait shouldn’t be very long.

It’s a deal of epic proportions with an enterprise value of $20 billion. It includes a private investment in public equity (PIPE) of $250 million from top-tier institutional investors and could potentially provide the target business with $800 million in cash proceeds from Gores Guggenheim.

Could this stock yield life-changing returns like Tesla (NASDAQ:TSLA) did? Let’s not get ahead of ourselves. Instead, let’s look a little deeper to see if there’s a worthy investment here.

A Closer Look at GGPI Stock

Gores Guggenheim went public with its initial public offering (IPO) in March. Prior to merger deal announcements, SPAC stocks tend to stay close to $10 a share. However, GGPI stock drifted down to $9.70 by July 1. But the next week, there was an announcement of a potential merger target, Swedish electric vehicle maker Polestar.

Electric vehicle SPACs were piquing Wall Street’s interest in early 2021. However, by the summer, that excitement had waned. Thus, the merger talk only gave GGPI stock a temporary boost to $10.69 per share.

Fast-forward to late September, and we saw a similar bump to $10.55, as it appeared the SPAC deal was drawing near. That little boost appears to be fading as well, though, with GGPI stock currently trading around $10.15.

To help you decide whether this $10 stock could someday turn into a $20 or $30 stock, let’s delve into the details of the target company.

A Deal Is Struck, Finally

On July 8, Wall Street learned that Gores Guggenheim was in talks with Polestar to possibly take that company public. Polestar is owned by Chinese automaker Geely Automobile (OTCMKTS:GELYY) and Volvo Cars. (Fun fact: It also counts Leonardo DiCaprio among its investors.)

The company offers a hybrid performance car called Polestar 1 and a fully electric Polestar 2. These are currently on roads across Europe, Asia and North America.

As InvestorPlace contributor Chris MacDonald reported, Polestar raised $550 million in external funding last year, which it plans to use to fund production of the Polestar 3 electric SUV beginning in the latter half of next year.

A lengthy wait, with not much besides radio silence, followed the July announcement. Finally, on Sept. 27, Polestar struck a SPAC merger deal with Gores Guggenheim. Post-merger, the combined company will be named Polestar Automotive Holding UK Limited, and it will trade under the ticker symbol PSNY on the Nasdaq.

Wall Street’s excitement over this event was short-lived, though. GGPI stock popped as much as 5.7% on the day before giving back much of those gains. But it’s certainly possible Wall Street will regain its appetite for EV SPACs.

Polestar expects to sell around 290,000 vehicles a year by 2025, up from 10,000 vehicles globally last year. Management predicts revenue of $1.6 billion this year and thinks it can double that in 2022. It also plans to launch three new vehicle models by 2024.

Yet, despite Polestar’s ambitious vision for growth, CEO Thomas Ingenlath has clarified that Polestar doesn’t intend to be a “Tesla killer.”

The Bottom Line on GGPI Stock

So, now you have a clearer picture of the electric vehicle startup that Gores Guggenheim targeted for a merger deal. Polestar already has vehicles on the roadways, so that’s a plus. Yet, Wall Street’s enthusiasm over the SPAC merger seems to have waned.

Therefore, any investment in GGPI stock should be small. The share price could double at some point, sure, but heed Ingenlath’s words and don’t look for a “Tesla killer” here.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


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