There has been a lot of hype surrounding Polestar (PSNY), the electric vehicle (EV) company, since it released its Polestar 2 car. But the stock has struggled to gain the traction it needs this year, and its share price has been down 54%, since going public on 24 June, and in September alone its share price plummeted 35%.
Last week the group released its new SUV, the Polestar 3, in the hope of it racing ahead of its competitors. However, the launch was uneventful and failed to impress investors and on the day of its announcement, 12 October, the group’s stock price fell 6%.
So, what’s left for Polestar (PSNY), and can its stock price regain some momentum?
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Polestar (PSNY) share price chart
Promising vehicles but investors not convinced by Polestar (PSNY) stock
Polestar (PSNY), a Swedish company, which is jointly owned by Volvo and China’s Geely Automobile Holdings (GELYY), launched its giant SUV last week, costing $83,900 (£74,422), the group’s CEO Thomas Ingenlath said: “Polestar 3 is a powerful electric SUV that appeals to the senses with a distinct, Scandinavian design and excellent driving dynamics.”
“It takes our manufacturing footprint to the next level, bringing Polestar (PSNY) production to the United States. We are proud and excited to expand our portfolio as we continue our rapid growth.”
Unfortunately for Polestar (PSNY), the markets were less impressed with the group’s new toy, and its share price dropped on the day of its launch.
The Polestar 3 appears to be a great car. From its new aerodynamic profile to the materials used inside the vehicle, which have been selected for their sustainability credentials. On the face of it the launch should have given Polestar (PSNY) some positive share price movements and excited potential investors.
But according to analysts, Polestar is currently not winning the race.
Geely Automobile Holdings (GELYY) share price chart
Red flags vs positive trajectory
Compared to other EV start-ups, Polestar (PSNY) does have a good and solid production track record and in its third-quarter earnings, PSNY reported that it delivered about 9,215 vehicles. The company added that it delivered about 30,400 cars in the first nine month of 2022, up 100% on a year-on-year basis.
Polestar Automotive (PSNY) said it expected to meet its global production target of 50,000 vehicles for 2022 and expects to deliver the remaining cars in the fourth quarter of the year.
But one reason why investors may not be jumping in excitement at Polestar’s latest launch and delivery results could be down to the concern surrounding the group’s profitability.
Its net losses for 2022 widened from $368m in 2021 to $503m in the first half of 2022. Analysts also forecast that this will increase to $1.07bn for the full year, as Polestar starts to increase production and has now released its new SUV. This is a huge concern for investors, and for Polestar’s bottom line, as the group had initially said it would turn profitable in 2024.
PSNY, which was taken public in June, via a special purpose acquisition company (SPAC) Gores Guggenheim, suffered a further setback in September when its stock price fell 35%, compared to the S&P 500 (US500), which dropped 9.3% in the same month and the Nasdaq Composite (NDAQ) which declined 10.5%. Analysts believe that because PSNY is a start-up EV company, its stock is more risky, compared to more established brands like Tesla (TSLA).
So, it seems there are several red flags surrounding PSNY for investors.
But there is some good news for Polestar (PSNY), its order numbers are up, which indicates there is customer demand for its products. In the group’s half year report it said: “In addition, we maintained strong momentum in our global order take and expect to deliver 50,000 cars to our customers this year, meeting our 2022 sales guidance. With several ground-breaking cars to come, Polestar (PSNY) is poised for a period of rapid growth.”
Production levels, as highlighted earlier, are also rising. With that said, the group is on a positive trajectory and that could help it look better in investors eyes.
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