Polestar Automotive Holding UK Limited

As the Trump administration's "Liberation Day" tariffs rattle the markets, it might seem like a terrible time to invest in electric vehicle (EV) stocks. Those higher tariffs could disrupt supply chains, drive up labor and component costs, and make EVs much more expensive.
Shares of Tesla, the bellwether of the sector, have already dropped 40% this year. That decline can be attributed to its slowing sales, shrinking margin, Elon Musk's polarizing work with the Trump administration, and rising tariffs.
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Yet Tesla's ongoing issues could represent opportunities for smaller EV makers. I believe three of those underdogs -- Rivian (NASDAQ: RIVN), Nio (NYSE: NIO), and Polestar (NASDAQ: PSNY) -- deserve some more attention in this chaotic market.
Rivian
Rivian sells the R1T pickup, R1S SUV, and custom electric delivery vans. It plans to launch its next vehicle, the cheaper R2 SUV, in 2026. Its deliveries surged 147% to 50,122 vehicles in 2023 but rose just 3% to 51,759 vehicles in 2024, as it dealt with supply chain constraints, stiff competition, and a temporary shutdown of its Illinois plant.
For 2025, Rivian aims to deliver only 46,000 to 51,000 vehicles as it shuts down its Illinois plant again for additional upgrades ahead of its R2 launch next year; grapples with more component shortages; deals with the aftermath of the fires in Los Angeles, one of its top markets; and braces for the Trump administration's incoming tariffs.
That outlook seems dim, but Rivian's gross margin actually improved from negative 188% in 2022 to negative-24% in 2024, and it anticipates a "modest" gross profit in 2025. Those improvements were driven by its lower manufacturing costs, the expansion of its higher-margin software and services business, and its sales of its own regulatory credits to other automakers. It won't turn profitable anytime soon, but that progress might pave the way for a smooth rollout of the R2 next year.
With an enterprise value of $12.6 billion, Rivian trades at just 2.3 times this year's sales. Tesla trades at 6.9 times this year's sales. Therefore, any positive developments regarding its current vehicles or the upcoming R2 could drive its stock higher.
Nio
Nio is a Chinese maker of electric sedans and SUVs that has been taking some baby steps into Europe. It differentiates itself from its competitors with removable batteries that can be quickly replaced at its own battery-swapping stations.
Nio's deliveries more than doubled in 2020 and 2021, then rose 34% in 2022 and 31% to 160,038 vehicles in 2023. That deceleration, which it attributed to supply chain issues, tougher competition, and China's cooling economy, spooked the bulls.
But in 2024, Nio's deliveries grew 39% to 221,970 vehicles as it grew its domestic market share with its ET sedans, ES SUVs, and EC crossovers. It also launched its lower-end Onvo L60, which resembles Tesla's Model Y but starts at just $20,500. Its annual vehicle margin, which had dropped from 20.1% in 2021 to 9.5% in 2023, also expanded to 12.3% in 2024, as it sold a higher mix of premium vehicles.
This year, its new Firefly compact electric hatchback could significantly boost its deliveries in China and Europe. It could also shift some of its production to Europe to offset the region's rising tariffs on Chinese EVs.
Nio isn't expected to break even anytime soon, but it's growing, has plenty of cash, and is still partly subsidized by the Chinese government. With an enterprise value of $8.9 billion, Nio looks even cheaper than Rivian at 0.7 times this year's sales.
Polestar
Polestar, which was previously Volvo's performance brand before it was spun out as an independent EV maker, sells three luxury EVs: the compact Polestar 2, the Polestar 3 midsize SUV, and the Polestar 4 compact coupe SUV.
Polestar's deliveries soared 80% in 2022 but grew only 6% in 2023, as some software problems drove it to postpone the launch of the Polestar 3 from late 2023 to mid-2024. It also hasn't reported its full-year results for 2024 yet, because of the restatement of its filings fo 2023 to correct some accounting errors, but it previously expected its revenue to decline by the "mid-teens" for the year as it dealt with slower-than-expected sales of the Polestar 3 and Polestar 4 in a tough market.
Those problems crushed its stock, but it's coming after Tesla this year with its "Trade in Your Tesla" deals of up to $20,000 toward the lease of a new Polestar 3. Those offers could gain more momentum as Tesla's brand loses its luster. Releasing its fourth-quarter and full-year earnings report -- which has already been delayed twice -- could also soothe its rattled investors.
Polestar is still deeply unprofitable, but analysts expect its revenue to more than double in 2025 as it launches its next vehicle, the Polestar 5 grand tourer, and expands its manufacturing plants in the U.S. and South Korea. With an enterprise value of $4.6 billion, it looks dirt cheap at 1.0 times its projected sales for 2025 -- and its stock could skyrocket if it gets its act together.
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3 Top EV Stocks to Buy in April

Polestar Automotive (NASDAQ: PSNY) has disappointed a lot of investors since its debut in June 2022. The electric vehicle (EV) maker went public by merging with a special purpose acquisition company (SPAC), and it started trading at $12.98 a share.
At the time, investors were impressed by its three core strengths: It was backed by Geely's (OTC: GELYY) Volvo, it was already manufacturing thousands of vehicles every year, and it had a clear roadmap for the future. Unfortunately, its growth slowed down, it delayed its new vehicle launches, and it had to revise its statements to deal with some significant accounting errors. It even abruptly replaced its CEO and CFO last September.
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Image source: Polestar.
All those problems caused Polestar's stock price to plunge to about $1. But with an enterprise value of $5 billion, it trades at less than 1 times its 2025 sales. Will it soar higher over the next 12 months, or will it drop even further below $1?
What happened to Polestar over the past few years?
Polestar sells three high-end EVs. It launched the compact Polestar 2 in 2020, and it rolled out the Polestar 3 mid-size SUV and Polestar 4 compact coupe SUV in 2024. Its deliveries soared 80% in 2022 but only rose 6% in 2023. Its total revenue declined 3% in 2023 as the ongoing EV price war reduced its pricing power.
That abrupt slowdown was caused by its supply chain constraints, tougher macro and competitive headwinds in the EV market, and software problems that postponed the launch of the Polestar 3 from 2023 to 2024. It also delayed the filing of its annual report for 2023 to correct some accounting errors. That revision resulted in the restatement of its financials for 2021 and 2022.
Polestar then hired Michael Lohscheller -- who previously led two other controversial EV makers, Nikola and VinFast Auto -- as its new CEO last October. That divisive appointment didn't drive away the bears.
Polestar also previously manufactured most of its vehicles in China, which exposed it to high tariffs on Chinese EVs in the U.S. and Europe. To avoid those tariffs, it started to assemble the U.S. version of the Polestar 3 at Volvo's plant in South Carolina. It also plans to manufacture more of its upcoming vehicles in Europe and South Korea. However, that tariff-dodging strategy could squeeze its margins with higher labor costs.
What will happen to Polestar over the next year?
Polestar plans to launch its next vehicle, the Polestar 5 grand tourer, in the second half of 2025. For the full year, it plans to enter France and nearly triple its annual deliveries to 155,000 vehicles. Based on those bold claims -- which we should certainly take with a grain of salt -- analysts expect its revenue to jump 166% to $5.3 billion.
Polestar also expects its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- which has been negative since its public debut -- to turn positive in 2025 as it scales up its business and streamlines its spending.
Polestar won't run out of cash anytime soon. It ended the third quarter with $501 million in cash and equivalents, and it secured another $800 million in bank facilities last December. But it's still shouldering about $4.4 billion in debt, and it could dilute its investors with secondary offerings to generate fresh cash. On the bright side, it expects its free cash flow (excluding its investments) to turn positive in 2027.
If Polestar hits its production targets this year, it plans to keep expanding by entering six new markets and rolling out its Polestar 7 SUV in 2026. If that happens, analysts expect its revenue to rise 46% to $7.7 billion next year. If it gets revalued at just 5 times its 2026 sales, its enterprise value could soar about 670% to $38.5 billion by the end of 2025. For reference, Tesla stock trades at 9 times next year's sales.
But is it the right time to buy Polestar's stock?
Polestar isn't down for the count yet, but I wouldn't turn bullish until it proves it can scale up its business and hit its lofty near-term targets. Its stock looks cheap, but its history of overpromising and underdelivering prevents me from buying it right now.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Where Will Polestar Automotive Stock Be in 1 Year?

After some positive trends in the EV market, particularly in China, stocks fell sharply this week after earnings were released. It's clear the profitability some investors had hoped for isn't coming soon.
According to data provided by S&P Global Market Intelligence, shares of Li Auto (NASDAQ: LI) fell as much as 13.8% this week, Nikola (NASDAQ: NKLA) dropped 15.2%, Polestar Automotive (NASDAQ: PSNY) was down 15%, and Blink Charging (NASDAQ: BLNK) outperformed the group, only falling 9.1% at its low. The stocks are down 13.3%, 14.9%, 14.3%, and 8.6%, respectively, for the week as of 2 p.m. ET on Friday.
Earnings and more earnings
The biggest news came from Li Auto, which reported vehicle sales of $5.9 billion in the third quarter of 2024 and a vehicle margin of 20.9%. Total revenue jumped 24% from a year ago to $6.1 billion and beat the $5.9 billion that analysts were expecting, and earnings of $0.38 per share also topped estimates.
But we have seen this earnings season that stocks that ran up ahead of earnings had expected even more than analysts did. Li Auto stock had run up over 50% from its September lows to late October, and this drop was just giving back some of those gains. We also learned today that deliveries for October were 51,443, about flat with the pace of deliveries in the third quarter, so growth may not continue for Li Auto.
At Nikola, the picture is much more bleak. The company shipped 90 trucks in the third quarter, but gross loss was a whopping $61.9 million, and net loss was $199.8 million. Nikola is bleeding cash and has just $198 million on the balance sheet, so a falling stock price will make it harder to get the money it needs to grow.
Any pessimism about the EV market often impacts Polestar, who is hoping to be cash flow break-even by the end of 2025, but doesn't have the scale or brand awareness to give investors much confidence after delivering just 11,900 cars in the third quarter.
When the rubber hits the road
It's also hard to overlook the possible change in policy environment after the election. Tariffs have already been put in place on Chinese EV imports, and those restrictions may increase, no matter which candidate wins. Even the subsidies and tax credits could change depending on the outcome.
A more restrictive trade environment would reduce the opportunity for EV exports from China and may make it more costly to buy EVs in the U.S. Not only does that impact Li Auto, but Blink Charging wants more EVs on the road in order to charge them, and that may be impacted by higher costs.
I think the core problem is the market finally realizing very few of these companies will be profitable in electric vehicles. The auto business isn't highly profitable for structural reasons that the addition of EVs doesn't change. And that's why I'm not buying the dip in EV stocks this week.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Electric Vehicle Stocks Plunged This Week

When Polestar Automotive (NASDAQ: PSNY) went public by merging with a special purpose acquisition company (SPAC) in June 2022, it initially seemed like a promising electric vehicle (EV) stock. It was backed by Geely's Volvo, manufacturing thousands of vehicles per year, and had a clear roadmap for the future.
Polestar's stock opened at nearly $13 on the first day but now trades at about $1.30 per share. Like many other SPAC-backed EV makers, it ran out of juice as its deliveries stalled and it racked up steep losses.
Could Polestar actually be a compelling turnaround play for contrarian investors? Let's see if it's the right time to buy, sell, or hold this unloved stock.
Image source: Polestar.
What happened to Polestar?
Polestar sells three high-end EVs: the Polestar 2 fastback, the Polestar 3 SUV, and the Polestar 4 SUV coupé. It plans to launch its next two vehicles -- the Polestar 5 GT and Polestar 6 electric roadster -- in 2025 and 2026, respectively.
Polestar's deliveries surged 80% to 51,491 vehicles in 2022, but only increased 6% to 54,626 vehicles in 2023. In the first nine months of 2024, its deliveries declined 23% year over year to 32,300 vehicles. The company blamed that slowdown on its supply-chain constraints, software problems that delayed its launch of the Polestar 3 from 2023 to 2024, and macro and competitive headwinds across the crowded EV market.
Polestar also delayed the filing of its 2023 annual report earlier this year to correct some accounting errors and restate some of its financials for 2021 and 2022. That delay coincided with the abrupt departures of its CEO and CFO. Michael Lohscheller, who previously led two other controversial EV makers -- Nikola and VinFast Auto -- subsequently took over as Polestar's new CEO at the beginning of October.
As Polestar struggled with those challenges, its revenue fell 3% to $2.38 billion in 2023 as its net loss more than doubled from $466 million to $1.17 billion. It also received a delisting warning from the Nasdaq after its stock dipped below $1.
Reasons to buy or hold Polestar's stock
It's easy to see why Polestar's stock plummeted, but investors shouldn't overlook the green shoots that are slowly appearing. On a sequential basis, its deliveries actually grew 82% in the second quarter of 2024 before pulling back 10% in the third quarter, and it still plans to scale up its business by entering seven new markets in 2025. It didn't provide a full-year delivery outlook for 2024 but is aiming to deliver about 155,000 vehicles in 2025.
Based on that optimistic outlook, analysts expect Polestar's revenue to rise 15% to $2.75 billion in 2024 and surge 146% to $6.77 billion in 2025. They expect its net loss to widen slightly to $1.19 billion in 2024 but narrow to $1.03 billion in 2025.
With an enterprise value of $4.52 billion, Polestar trades at just 1.6 times this year's sales and less than one times next year's sales. By comparison, Tesla trades at nearly 7 times this year's sales. Therefore, Polestar's stock could soar a lot higher if it ramps up its deliveries.
Polestar also believes it can achieve a positive gross margin by the fourth quarter of this year as it overcomes its supply-chain constraints and ramps up production of the Polestar 3. It expects its cash flow can reach breakeven levels by the end of 2025 as it streamlines its spending.
Reasons to sell Polestar's stock
Those goals are ambitious, but Polestar's balance sheet is still a hot mess. It was still shouldering $2.79 billion in net debt at the end of 2023 and ended its latest quarter with just $669 million in cash and equivalents. It secured an additional $300 million in funding in August but will likely need to take on even more debt to roll out the Polestar 5 next year.
Another pressing issue is that Polestar still manufactures most of its vehicles in China (since its former parent Geely is a Chinese automaker), which exposes it to the rising tariffs on Chinese-made EVs in the U.S. and Europe.
It's trying to offset that pressure by expanding its newer plants in the U.S. and South Korea, but that strategy could drive up operating costs as the constant pricing pressure in the EV market compresses its gross margins. Polestar has already cut its prices repeatedly over the past year to keep up with those aggressive competitors.
Is it time to buy, sell, or hold Polestar's stock?
I don't think Polestar is a safe stock to buy and hold yet. It might be faring better than other tiny luxury EV makers like Lucid but hasn't proven it can scale up its business and differentiate itself from its other high-end competitors. For now, I'd either sell or avoid Polestar until it achieves some of its lofty goals.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Polestar Automotive Stock: Buy, Sell, or Hold?

The stock of Polestar Automotive (NASDAQ: PSNY) has been on a tear recently, surging 108% since early August as it overhauled its management team and reestablished compliance with Nasdaq listing requirements.
However, the company has struggled with production delays, slower demand, and other factors, and the stock remains 88% below its price since going public in 2022. With its new management, is Polestar a good buy while the stock is below $2.50?
Polestar has faced several challenges
Polestar is headquartered in Sweden, jointly owned by Volvo Cars and China's Geely Automobile Holdings. The company produces high-end premium electric vehicles (EVs) that compete with the likes of Tesla and Lucid.
It doesn't have its own factory. Instead, the company uses its partnerships with Volvo and Geely to produce its vehicles at their factories, giving it an asset-light business and allowing it to focus specifically on development and design.
The company has faced challenges in recent years. Last year, it had delays in launching its Polestar 3 SUV, which it had to push back one year due to software issues.
On top of that, consumer demand for EVs has been waning. Last year, the company delivered 54,600 cars, short of its initial goal of 80,000. Slower deliveries continued in the first half of this year, with Polestar's 20,371 vehicle deliveries down 27% from last year.
Tariffs on Chinese-made vehicles have thrown another wrinkle into Polestar's plans. The company has made all of its EVs in China but is now shifting production of its Polestar 3 to the United States this year and its Polestar 4 production to South Korea in the second half of 2025. Until then, it faces tariffs of 20% for imports to the European Union and more than 100% for United States deliveries.
Another issue for Polestar has been its compliance with Nasdaq listing rules. The company failed to meet deadlines for its 2023 and first-quarter 2024 reports.
On July 5, Nasdaq notified the company that it did not comply with the minimum bid-price requirements because its shares had closed below $1 for 30 consecutive trading days. In August, it filed its annual report on Form 20F and recently met the minimum bid requirements to get back into compliance.
What's next for Polestar
Polestar investors have had a bumpy ride, and the company has overhauled its management after its significant struggles. Over the past few months, it has brought in a new CEO, chief financial officer, head of design, and head of global communications. The new CEO, Michael Lohscheller, previously led two other struggling EV makers, Nikola and VinFast Auto.
PSNY revenue (TTM) data by YCharts; TTM = trailing 12 months.
One crucial figure to monitor is Polestar's cash burn. In the past year, it earned around $2 billion, but it had a net loss of $1.4 billion. At the end of the second quarter, the company had around $669 million in cash and cash equivalents.
In August, it secured $300 million in funding from one bank, and this year, it has taken on $1.3 billion in external financing. While the funding helps extend the runway, it is "nowhere near fully funded," Cantor Fitzgerald analyst Andres Sheppard told Reuters.
Polestar expects a more robust back half of the year, with the fourth quarter being particularly strong. It will continue looking for ways to reduce costs, and next year it hopes to deliver 155,000 vehicles and break even on cash flow.
Is Polestar a buy?
Polestar's recent capital raise is a positive development and extends its runway. However, the premium EV maker continues to lose money and has work to do to achieve positive cash flow. The company has also undergone extensive changes, and its new management has its work cut out for it.
If Polestar interests you, add it to a watch list and monitor its ongoing progress with deliveries and, more importantly, operating margins and profits. Shares of money-losing companies are vulnerable to further price declines, and it hasn't proved it can turn a profit quite yet.
Until then, investing in Polestar today is risky, and most investors can avoid the stock for now.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*
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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Should You Buy Polestar Stock While It's Below $2.50?

The first half of the year was mostly negative for electric vehicle (EV) investors. Increasing competition, continued consumer hesitancy over lack of charging infrastructure, and struggling economic conditions in many countries slowed sales growth for names including EV leader Tesla (NASDAQ: TSLA).
But sentiment started to change in the third quarter, and some EV stocks ticked higher. Tesla stock, for example, surged 22.2% last month, according to data provided by S&P Global Market Intelligence. Even EV newcomer Polestar Automotive (NASDAQ: PSNY) shares soared 41%. One exception was electric heavy-truck maker Nikola (NASDAQ: NKLA). Its shares dropped nearly 31%, but the stock reversed course at the end of the month, recovering about half of September's losses in the past week.
The push higher in Tesla shares erased most of 2024 losses. Investors grew optimistic about Tesla's Q3 delivery report as well as the upcoming Robotaxi update event expected on Oct. 10.
EV investors look for the winners
Tesla's vehicle sales did return to growth in Q3. After deliveries in the first half of 2024 dropped 6.5% compared to 2023, the company's nearly 463,000 deliveries in Q3 were up by 6.4% versus last year. But that didn't quite satisfy investors, and Tesla stock has dipped to start October. That's because it still doesn't seem likely that Tesla will reach its goal of 2 million EV deliveries this year. It would need more than 700,000 units in Q4 for that to happen.
But investors had another reason to send Tesla stock higher last month, too. Anticipation for what CEO Elon Musk will say in its upcoming Robotaxi event is high. Investors will be listening closely on Oct. 10 when the company offers its vision of when it may see meaningful monetization of its high-profit, self-driving software. Earlier this week, widely followed Tesla analyst Dan Ives from Wedbush wrote, "We believe Robotaxi Day will be [a] seminal and historical day for Musk and Tesla and marks a new chapter of growth around autonomous, FSD [full self-driving], and [an] AI [artificial intelligence] future at Tesla."
Investors also rewarded Polestar for its delivery update in September. At the end of August, the Volvo subsidiary reported a sequential 82% increase in EV deliveries in its Q2 compared to Q1. Investors poured into the stock after that report. Polestar also had a relatively high 7.6% of its shares sold short as of mid-September, which likely contributed to a short squeeze in those shares.
Nikola is in a different segment of the EV business. Its hydrogen fuel cell-powered heavy trucks aim to create an entirely new market space. The stock has dropped 80% year to date as the company has been forced to raise capital as it works to build out the fueling infrastructure for those trucks.
But sales are growing, and investors reacted positively when Nikola said it wholesaled 88 trucks to its dealers for sales to end users in Q3. Nikola has now wholesaled 200 hydrogen fuel cell trucks to dealers through the first three quarters of the year.
Nikola still has to grow the infrastructure, and its trucks compete with Tesla's battery-electric Semi trucks. That makes it the riskiest of these three names and helps explain why shares have dropped so much so far this year.
Should you invest $1,000 in Tesla right now?
Before you buy stock in Tesla, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tesla wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $728,325!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
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*Stock Advisor returns as of September 30, 2024
Howard Smith has positions in Nikola and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Why Tesla and Polestar Stocks Soared, but Nikola Plunged in September

Polestar Automotive (NASDAQ: PSNY), like all companies, wants to put its best foot forward when it reports earnings, which is why the lead headline in the second quarter of 2024 was an 82% sequential increase in deliveries. That sounds great, but if deliveries jumped 82% in just one quarter there's got to be a bigger story going on. The bigger story isn't great. Here's some key facts you need to know before you buy this electric vehicle (EV) stock.
1. Polestar is back in compliance
In mid-August, a Polestar press release said that it had "filed its Annual Report on Form 20-F for the fiscal year ended 31 December 2023 with the U.S. Securities and Exchange Commission. As a result, the Company has regained reporting compliance, meeting the requirements of Nasdaq Listing Rule 5250(c)(1)."
Being out of compliance means that a company is, for some reason, not living up to the exchange's expectations. In this case, the shortfall was obviously a failure to provide regulators with required financial statements. Polestar has also recently received a notice about its stock price falling below $1 per share, which is troubling, as well.
The question is, why did the company delay its 20-F filing? (It's pretty obvious why it received a notice about its stock trading below $1.) According to a Securities and Exchange Commission filing by the company, it had to delay because it needed additional time for the "evaluation and quantification of certain errors in historical 2021 and 2022 annual and interim financial statements." These things happen, but when they happen to stocks that are trading near $1 a share you need to be extra careful.
2. Polestar revamped its leadership team
While the EV company has worked through its compliance issues, with both the SEC and the Nasdaq exchange, it also decided to turn over its top leadership, highlighting in the second-quarter earnings release that it hired a new CEO, head of design, and head of global communications. More recently the company brought in a new CFO. When a company massively overhauls its top brass, particularly when there have been accounting issues (see point No. 1), conservative investors should probably start looking elsewhere.
3. Polestar's quarterly results weren't great
After getting past the bullet points at the top of the second-quarter earnings report, which were largely positive highlights, investors got to see the financial statements. The story wasn't very good. Revenues were down 17% year over year in the quarter. The company explained that this was "mainly due to lower global vehicle sales and higher discounts." So it cut selling prices and still couldn't sell as many cars? That's a bad sign.
Gross profit fell from $900,000 to negative $2.4 million, which means the company is paying more to build its cars than it is generating from selling them. That is not a sustainable business model. So far, it looks like Polestar is a company that is struggling, even as it highlighted a large sequential increase in deliveries.
Meanwhile, research and development spending dropped a huge 76%. The company explained that the decline was because of changes in the capitalization and amortization of this expense as it began selling a new model. But, given the other issues going on, a glass-half-empty read here could be that the company is pulling back extra hard as it looks to save money and/or make the earnings picture look a little brighter. Time will tell on that front, but it is important to remember that R&D is something that you don't want to skimp on in the highly competitive auto industry. Which brings up point No. 4.
4. Polestar is still losing money
Polestar lost $242.3 million in the second quarter, a 12% improvement over the loss in the second quarter of 2023. That's good on the one hand, but a more realistic view would be that it is really just less bad.
PSNY data by YCharts
Looking further back, meanwhile, Polestar has never had a profitable year. It is an upstart company, so that's not surprising. But when you add in accounting issues and massive management turnover, the company's story isn't a pretty one. Only a very aggressive investor will want to own these shares.
Polestar is a very risky stock
Polestar is one of a handful of upstart EV makers that is trying to break into the auto industry with all-electric vehicles. So far, the only company that has really managed to do that is Tesla. As the chart above highlights, investors were excited by Polestar's prospects early on, perhaps believing it could be the next Tesla. But given the ongoing negative news, Wall Street has soured on the shares, pushing them down roughly 90% from their high-water mark. Only the most aggressive investors should be considering Polestar today.
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Is Polestar Automotive Stock a Buy?

Polestar Automotive (NASDAQ: PSNY) has disappointed a lot of investors since its market debut. The electric vehicle (EV) maker, which was spun off from Volvo, went public by merging with a special purpose acquisition company (SPAC) in June 2022. Its stock opened at $12.98 on its first day, but it now trades at about $1.60.
Polestar lost nearly 90% of its value as software issues and supply chain constraints throttled production. The macro and competitive headwinds also forced it to cut its prices to stay competitive. But could this out-of-favor EV stock bounce back over the next three years? Let's take a fresh look at its business to decide.
Image source: Polestar.
Polestar is producing plenty of vehicles
Polestar was once a racing team that transformed Volvo's cars into high-performance racing vehicles. Volvo, which was acquired by the Chinese automaker Geely in 2010, bought Polestar's brand in 2015. In 2017, Geely and Volvo rebooted Polestar as a stand-alone, high-performance EV brand. That reinvention led to its spin-off and SPAC-backed debut.
But unlike many other SPAC-backed EV makers, which are struggling to produce more vehicles, Polestar already manufactures tens of thousands of vehicles each year. It sells three high-end EVs: the Polestar 2 fastback, the Polestar 3 SUV, and the Polestar 4 SUV coupé in select markets. It plans to launch its next two vehicles, the Polestar 5 grand tourer and Polestar 6 electric roadster, in 2025 and 2026, respectively.
Yet Polestar's growth is slowing down. Its total deliveries jumped 80% to 51,491 in 2022 but only rose 6% to 54,626 in 2023. It pinned that abrupt slowdown on its supply chain challenges and some software issues that delayed the launch of the Polestar 3 from 2023 to early 2024.
In the first half of 2024, its deliveries fell 27% year over year to 20,371 vehicles. But its deliveries still rose 82% sequentially in the second quarter -- and it plans to keep expanding as it gets ready to enter seven new markets in 2025. It didn't provide an exact outlook for 2024, but it aims to deliver 155,000 vehicles in 2025 as it ramps up its production of the Polestar 3 and launches the Polestar 5. It will support that expansion with its new plants in the U.S. and South Korea.
Those growth rates still put Polestar far ahead of other struggling luxury EV makers like Lucid Group (NASDAQ: LCID), which only plans to deliver about 9,000 vehicles this year. From 2023 to 2026, analysts expect Polestar's revenue to grow at a compound annual growth rate (CAGR) of 61% and reach $9.9 billion by the final year.
That's an impressive growth rate for a stock that trades at less than 2 times this year's sales. By comparison, Lucid and Tesla trade at 12 and 7 times this year's sales, respectively. So if Polestar successfully scales up its business, its stock could potentially double or triple and still be considered a bargain.
But the red flags are tough to ignore
Polestar's stock seems cheap, but it's trading at that discount for obvious reasons. First, it delayed its 2023 annual report earlier this year to correct some accounting errors and restate some of its 2021 and 2022 numbers. That delay coincided with a major management shakeup, which replaced both its CEO and CFO. Its new CEO, Michael Lohscheller, also previously led two other controversial EV makers: Nikola and VinFast Auto.
Those abrupt changes rattled Polestar's investors, and its stock dropped below $1 from May to August and triggered a delisting warning from Nasdaq. It climbed back above that threshold over the past month, but it's still on shaky ground.
Polestar already reduced its vehicle prices by thousands of dollars over the past year, and the new European Union tariffs on its Chinese-made EVs could exacerbate that pressure and hamper its planned expansion into more European countries. Those challenges cast doubts on its goal of expanding its gross margin from negative 3.2% in the first half of 2024 to positive "double digit" levels by the end of the year.
Polestar's net loss widened from $466 million in 2022 to $1.17 billion in 2023, and analysts expect it to stay deep in the red through 2026. That's a grim situation for a company that was still shouldering $2.79 billion in net debt at the end of 2023 and holding just $669 million in cash and equivalents at the end of its latest quarter.
Where will Polestar's stock be in three years?
Polestar is producing plenty of vehicles, its long-term goals sound rosy, and its stock looks dirt cheap relative to its sales. However, its alarming accounting issues, management changes, and bloody balance sheet could all limit its gains. That's why I don't think Polestar's stock will bounce back over the next three years. Instead, it could easily miss its ambitious production and gross margin targets -- and its stock could get a lot cheaper before it's considered a bargain.
Should you invest $1,000 in Polestar Automotive Uk Plc right now?
Before you buy stock in Polestar Automotive Uk Plc, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Polestar Automotive Uk Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Where Will Polestar Automotive Stock Be in 3 Years?

Although electric vehicle (EV) company Polestar (NASDAQ: PSNY) has seen notable improvements in its operations lately, Wednesday saw its stock hit with a big sell-off. On the back of a fresh analyst price target cut, the company's shares took a nearly 12% hit to their price, a more precipitous decline than the 0.2% drop of the benchmark S&P 500 index.
A 25% chop to the price target
The party behind the reduction was Piper Sandler's Alex Potter. Before market open on Wednesday, Potter shaved $0.50 per share from his Polestar price target, leaving it at a new level of $1.50. This didn't affect his recommendation on the EV stock, however, which he maintained as "neutral."
Although Polestar seems to be stabilizing in certain ways -- the company recently regained compliance with Nasdaq listing requirements, and managed to compile and publish its second-quarter earnings -- sales volumes are cause for concern. In light of that, Potter has trimmed his estimates for overall volumes in the first half of this year.
The pundit added that he's also counting on a slower-than-anticipated rollout of the Polestar 3 and 4 models.
Is the company targeting the right segment?
Polestar is one of the smaller and more struggling EV makers, and it's found the increasingly crowded market to be a challenge. Its business strategy might also be flawed; as Potter pointed out in his new analysis, "While we think Polestar makes beautiful cars, we remain concerned about the vehicles' relatively high price points and potential EU tariffs on Chinese-made EVs."
Should you invest $1,000 in Polestar Automotive Uk Plc right now?
Before you buy stock in Polestar Automotive Uk Plc, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Polestar Automotive Uk Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $661,779!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
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*Stock Advisor returns as of September 3, 2024
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Investors Hit the Brakes on Polestar Stock Today

There's no stopping Polestar Automotive (NASDAQ: PSNY). After going ballistic last month, shares of the Swedish electric vehicle (EV) maker are off to a flying start in September, surging 19.7% at their highest point in trading as of 12:10 p.m. ET Tuesday.
Polestar has appointed a new chief financial officer as it gears up to launch new models and expand its footprint, and investors believe this could just be the beginning of better days ahead for the EV stock.
Polestar's game plan: New leaders and new cars
This morning, Polestar announced the appointment of Jean-Francois Mady as its chief financial officer effective Oct. 21, 2024. Most recently, Mady was with auto giant Stellantis. Polestar's current CFO, Per Ansgar, joined the company on an interim basis earlier this year and will resume his role as the CFO of Geely Sweden Holding. Geely Holding and Volvo are major stakeholders in Polestar.
Mady's appointment is among the several recent leadership changes announced at Polestar, including the appointment of a new CEO, Michael Lohscheller, effective Oct. 1.
Given Polestar stock's staggering rally in recent weeks, investors appear to be banking on the EV maker's new leadership to turn the company's fortunes around. Also fueling their enthusiasm this morning, though, was the other update from Polestar.
Polestar just announced plans to expand its presence in the U.K. and aims to take its dealership locations from nine to 17 over the next 18 months.
What's next for Polestar stock?
Polestar has a busy year ahead as it begins deliveries of its new car, the Polestar 3 SUV, and ramps up deliveries of the Polestar 4 SUV, which it began delivering only recently. Investors hope the new models will shore up Polestar's dwindling revenue and margins. The company's revenue fell 17% year over year in its second quarter although its deliveries jumped 82% sequentially. With management remaining hopeful for the rest of the year, investor interest in Polestar could remain strong as they try to find value in the EV stock that lost 65% value in the first half of 2024.
Should you invest $1,000 in Polestar Automotive Uk Plc right now?
Before you buy stock in Polestar Automotive Uk Plc, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Polestar Automotive Uk Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $731,449!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of September 3, 2024
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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