Gores Guggenheim (NASDAQ:GGPI) is one of the few bargains among electric vehicle (EV) stocks. Yes, GGPI stock has inched higher over the past month. But this special purpose acquisition company (SPAC), which is taking Polestar public in a few months, remains at an implied valuation well below other early-stage EV companies like Lucid Group (NASDAQ:LCID).
This is despite the fact it has as strong of a chance as its peers to give Tesla (NASDAQ:TSLA) a run for its money. If not that, Polestar can at least scale up to a six-figure amount of annual deliveries.
Either way, based on how the market values Gores Guggenheim today, you would think its merger target was an “also-ran,” like Fisker (NYSE:FSR). That is, a fledgling operation deserving of a discount due to high uncertainty over its ability to hit growth goals.
To the contrary, Polestar has been in operation for several years and already generates billions in annual sales. Backed by Chinese automaker Geely (OTCMKTS:GELYF) and Volvo (OTCMKTS:VLVLY), Polestar has established itself in the European EV market. Now, it has its sights set on becoming a major brand in the U.S.
You may have seen its Super Bowl ad. If you’re an EV fan, chances are you’ve heard major industry news platforms talk about the company. But besides increased attention and awareness, Polestar is also making headway in terms of locking down big orders.
As InvestorPlace’s Eddie Pan reported April 4, rental car chain Hertz (NASDAQ:HTZ) is ordering 65,000 Polestar 2 vehicles. That’s a figure not too far away from the 100,000 Tesla vehicles Hertz ordered last October.
This transaction alone doesn’t automatically make this company a “Tesla killer” in the making. Still, it does bolster the argument that Polestar can become a Tesla-esque global EV brand. Based on the growth goals laid out in its investor presentation, management intends to increase delivery numbers tenfold by 2025.
Annual sales three years out could hit $17.6 billion. Not bad, given the implied valuation of GGPI stock today comes in at around $25.5 billion. How does this EV maker intend to hit this sales goal? First, it will roll out its existing models in the U.S. Then, it plans to launch three new vehicles — two of which are SUVs.
Having said all this, keep a few things in mind. The market’s cycling out of growth plays could affect its short-term performance. This factor could also outweigh any post-SPAC boost it receives once the merger completes.
The long-term of course is no slam dunk, either. Growing tenfold in three years is a tall order. But if you’re willing to trade high risk for high potential, GGPI stock remains a great EV play.
On the date of publication, Thomas Niel 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.