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Polestar Is an Intriguing Pick Out of the Electric Vehicle Crowd

Gores Guggenheim (NASDAQ:GGPI) is a special purpose acquisition company (SPAC) that has announced a deal: it intends to buy Polestar, an electric vehicle (EV) firm based out of Sweden. As investors warmed up to this deal, GGPI stock had rallied significantly from the opening $10 SPAC share price. However, the recent market dip has sent GGPI stock back down to the $12 level.

A close up of a Polestar vehicle in front of a company sign.
Source: Jeppe Gustafsson / Shutterstock.com

The company hopes to complete its SPAC merger process in the first half of 2022. Once completed, the company will be known as Polestar and trade under the PSNY ticker on the Nasdaq exchange.

So, why should investors give Polestar and GGPI stock attention amid the crowded field of EV companies? There are a few reasons.

Polestar Has a Strong Operating Business

At this point, just being an EV company doesn’t merit much attention. We’ve had what seems like a million different electric vehicle companies debut their shares over the past 18 months. The novelty factor is long gone. So, what does Polestar bring to the table that makes it stand out in this highly competitive sector?

Actually, the company brings quite a lot. For one thing, Polestar is already well into commercial production. The company delivered around 10,000 vehicles in 2020 and will finish 2021 with a substantially higher figure. Further, it has already topped $1.6 billion in revenues for 2021.

Polestar is much closer to a firm like Xpeng (NYSE:XPEV) in that it’s delivering a meaningful number of cars to customers and generating solid revenue figures. It’s much more than a prototype and a Microsoft (NASDAQ:MSFT) PowerPoint presentation, unlike many other EV firms that came public this year.

Pedigree and a Full-Scale EV Platform

How did Polestar get off to such a fast start compared to other EV names? Well, it was born out of close ties to Volvo (OTCMKTS:VLVLY). A Volvo partner created Polestar back in 1996. Volvo eventually acquired it outright. Over the years, it has become a high-performance brand for the company.

Volvo is now owned by Geely (OTCMKTS:GELYY). This gives it access to manufacturing in China along with its facilities in Europe and the United States. Polestar then has access to Volvo’s infrastructure, greatly helping it speed up its time-to-market and keeping it from having to reinvent the wheel in terms of basic manufacturing.

Unsurprisingly, having Geely and Volvo at its side allows Polestar to target a far broader range of markets as well. The Polestar 1 and 2 are a top-tier sports car and a hatchback, respectively. The Polestar 3, an SUV, is expected to launch in 2022. The company has several more models in the works, too.

Most of the publicly traded EV companies serve fairly defined markets. A company is trying to make an EV truck or an EV SUV or whatnot. But Polestar is also one of the few names that has the financial resources and manufacturing muscle to compete across a spectrum of vehicles right out of the gate. In other words, Polestar looks like one of the few names that can be a real Tesla (NASDAQ:TSLA) competitor rather than just a niche player. That means great things for GGPI stock.

The Verdict on GGPI Stock

By now, EV SPACs are hardly a new concept. Traders should be fully aware of the risks. These things are often long on initial hype and light on results. If GGPI stock runs up to $30 or $40 as so many other peers did, be wary. Automotive SPACs have had a clear boom-bust cycle for the past year now.

That said, Polestar is in a whole different quality tier from most of its rivals. This is a company with excellent backers and a strong product line-up already. The firm has proven substantial customer demand as well. Sure, the company is losing a lot of money right now. But that seems fixable, given that Polestar is just starting to reach commercial scale and has more new vehicle launches in the pipeline.

It won’t be a straight line up for Polestar and GGPI stock, to be sure. However, heading into 2022, shares should be able to find some upside.

On the date of publication, Ian Bezek did not hold (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.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.


Article printed from InvestorPlace Media, https://investorplace.com/2021/12/ggpi-stock-is-an-intriguing-pick-out-of-the-electric-vehicle-crowd/.

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