If you happen to be a speculator, you might have Gores Guggenheim (NASDAQ:GGPI) stock — the special purpose acquisition company that will take electric vehicle firm Polestar public — on your radar. Over the trailing month, GGPI stock is up 10%, bringing its year-to-date tally a little less than 1% below parity. With gasoline prices seemingly soaring to the moon, Polestar benefits from renewed interest in EVs.
True, such a macro tailwind will positively affect rival firms. However, Polestar isn’t just passively riding coattail. Instead, as InvestorPlace contributor GS Early argued, the EV upstart has plenty of business-specific news to get excited about. It’s just that Tesla (NASDAQ:TSLA) tends to dominate the news cycle, preventing GGPI stock from receiving its just dues. Early wrote:
“So, it makes perfect sense that GGPI stock and Polestar’s recent announcement of landing a 65,000 unit deal with Hertz was just a blip that seemed to provoke as much concern as enthusiasm. Yet Polestar also has deals with Enterprise in the US and Europcar in Europe. Or the fact that it has a universal charger and that it has cut a deal for two-years of free charging at Electrify America charging stations.”
Few if any will deny that on some levels, Polestar is very intriguing. However, as much as the electrification of transportation argument makes sense, we’ve got to deal with current realities.
One of them is that the Russian attack on Ukraine has introduced a new supply chain crisis for the automotive sector, according to the Wall Street Journal. And this crisis also affects EV manufacturing.
Adding insult to the injury, the disruption along with skyrocketing inflation has caused the average new EV transaction price to poke just above $60,000. That’s simply going to strain many households’ ability to make the pivot to electric transportation, considering that no EV maker is likely to just eat the cost spikes. Thus, you want to be careful about going overboard with GGPI stock.
On the date of publication, Josh Enomoto 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.
