While Gores Guggenheim’s (NASDAQ:GGPI) shareholders might not see the glass as half-full at the moment with GGPI stock stuck in neutral (it’s been trading in a tight range between $11 and $12 for more than a month), the reality is that Polestar, its merger partner, is delivering on its end of the bargain.
For aggressive, long-term investors who seek exposure to electric vehicles and don’t already own GGPI stock, it is an excellent name to buy And if you own the shares of the EV maker already, don’t worry about its poor performance recently.
Barring unforeseen developments, Polestar ought to deliver considerable wealth to its patient shareholders in the future.
It’s all about the journey. Enjoy it.
A Great Entry Point
In my last article about Gores Guggenheim and Polestar in December, I suggested that buying GGPI stock under $10 would be an excellent entry point that would enable investors to gain exposure to one of the most exciting EV stocks anywhere in the world at a reasonable price.
But Gores Guggenheim probably won’t trade under $10 again.
That’s because, on Jan. 11, Polestar announced that it had met its goal of selling 29,000 EVs last year, That represented a 185% increases compared with 2020.
“We are delivering on our targets,” said Thomas Ingenlath, Polestar’s CEO, in a statement. “It is a hugely exciting time for the brand, with new markets and models to support the ambitious growth plans we have set for ourselves.”
In 2021, Polestar also started doing business in nine new geographic markets, bringing its global reach to 19 markets. By the end of 2023, it expects to have a presence in at least 30 countries.
As for its retail stores, it expects to have more than 150 worldwide by the end of 2022. Polestar’s sales, naturally, are expected to continue trending higher, as it already has booked a healthy number of orders for the year ahead.
This year, the automaker will release Polestar 3, a high-end SUV. The best part is that it will be built in the U.S. And the SUV will possess state-of-the-art autonomous driving technology.
In 2023, the company plans to launch Polestar 4, a smaller SUV coupe. Finally, in 2024, Polestar 5 is due to arrive. It will be a four-door, high-performance sedan based on the 2020 Polestar Precept concept car.
In the past month, the stock has rebounded anytime GGPI stock has gotten anywhere near $11. That’s why I’m not sure whether it will fall below $10 again. But, on the other hand, if you can get it for around $11, you absolutely should.
The Value Proposition
As I said in my last article, Polestar has a lot going on.
First, it has an excellent special purpose acquisition company (SPAC) merger partner in Gores Guggenheim, which is led by Guggenheim Partners — an investment manager with more than $330 billion of assets under management — and Alec Gores, a master of private equity and arguably one of the world’s best SPAC investors.
Secondly, it has been developed with the full backing and engineering resources of Volvo (OTCMKTS:VLVLY) and Geely (OTCMKTS:GELYY), one of China’s most successful automotive companies. As I noted in December, Geely is controlled by Li Shufu, the 52nd wealthiest person on the planet.
Lastly and most importantly is the fact that Polestar already had tremendous momentum before announcing it was merging with Gores Guggenheim. Most SPAC mergers provide lots of promise but very little substance. The SPAC that’s due to merge with President Donald Trump’s social media company comes to mind.
As of this writing, Polestar’s valuation after the merger will have a market cap of $24.7 billion based on 2.13 billion shares outstanding. And, as of this writing, Trump Media and Technology Group (TMTG) will be valued at $15.1 billion based on 224.7 million shares outstanding after it combines with Digital World Acquisition Corp. (NASDAQ:DWAC).
Polestar’s 2021 revenues are estimated to have been $1.6 billion. TMTG had no revenue last year.
If you can’t see the obvious value proposition of Polestar relative to garbage like Digital World, you shouldn’t be investing.
The Bottom Line
I continue to believe that Polestar could be one of the finest EV investments to come along since Tesla (NASDAQ:TSLA).
Polestar will continue to deliver for the owners of GGPI stock before and after its 2022 merger. As a result, it’s an excellent buy for long-term investors.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
