Special purpose acquisition companies, or SPACs, have cooled from their highs in 2021. However, the electric vehicle (EV) maker Gores Guggenheim’s (NASDAQ:GGPI) stock may be the diamond in the rough. Shares of the company notched up to $15 late last year but quickly fell back to the $10 range. It has been trading at that level since.
However, investor optimism in the stock is on the rise as GGPI nears its upcoming SPAC merger with the Volvo-backed EV maker Polestar. The merger will give GGPI stock renewed upside, making it a great buy at current price levels.
Polestar’s strong performance offers numerous growth prospects for Gores Guggenheim. In 2021, the luxury EV maker achieved its annual sales target of 29,000 vehicles, resulting in an impressive year-over-year (YOY) growth of over 185%. Polestar hopes to keep this upward trajectory going and expand its presence in the EV space. In 2022, the company expects to have 150 retail locations across 30 international markets. By 2025, annual vehicle sales are estimated to hit 290,000.
Adding to its ambitious growth targets, Polestar also has several exciting projects in the works. The company recently announced its deal with Hertz (NASDAQ: HTZ) which will purchase 65,000 Polestar vehicles in the next five years. At a retail value of $49,000 per car, this will secure the company $3.2 billion in revenue. The company also inked a deal with Enterprise to expand its presence in the car rental marketplace.
Gores Guggenheim is a name that often gets overlooked in the EV space but the merger with a high-growth name like Polestar will put the company in the limelight. As for its stock price, GGPI is what many investors would consider a bargain buy. Shares of the company are trading at a discounted valuation relative to other EV stocks due to macroeconomic headwinds in the space. A low share price coupled with a hot SPAC merger on the horizon makes GGPI stock a strong play in my books.
On the date of publication, Divya Premkumar 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.