Newly Listed Polestar Automotive Stock Is Compelling

Polestar Automotive Holding UK PLC (NASDAQ:PSNY) may be newly listed on the stock market, but the electric vehicle (EV) company has been around for a few years.

The Swedish-based joint venture between Volvo Car AB (STO:VOLCAR-B, OTCMKTS:VLVOF) and its parent company Zhejiang Geely Holding Group Co., Ltd began trading on the Nasdaq on June 24. (Source: “Polestar Rings Nasdaq Bell to Celebrate Public Listing,” Polestar Automotive Holding UK PLC, June 28, 2022.)

Unlike many EV companies, which try to entice investors with promises of near-term production, sales, and revenues, Polestar Automotive Holding UK PLC has already been producing two vehicle models.

The company built "Polestar 1" hybrid cars between 2019 and 2021. Polestar 1 had an electric-only range of 124 km (77 miles), the longest electric-only range of any hybrid car in the world at the time.

Polestar Automotive has been selling the "Polestar 2," the company’s first fully electric high-volume car, in the U.S., Europe, and China since 2020.

From 2022 onward, Polestar Automotive Holding UK PLC will be launching one new EV model per year, starting with the "Polestar 3," the company’s first full-size electric sport utility vehicle (SUV). Polestar 3 is expected to debut in October.

The "Polestar 4," a smaller electric performance SUV coup, will follow in 2023.

Polestar Automotive Holding UK PLC expects to have two additional SUV models—including the "Polestar 5," a four-door grand tourer (GT)—in showrooms by 2024.

Large EV Order From Hertz

Polestar Automotive got a big jolt in June before going public when it announced a global partnership with Hertz Global Holdings Inc (NASDAQ:HTZ). (Source: “Polestar Begins Delivering on 65,000 Electric Vehicle Partnership With Hertz,” Polestar Automotive Holding UK PLC, June 9, 2022.)

Polestar Automotive will provide up to 65,000 EVs to Hertz over five years. This is one of the largest single orders of electric cars ever made. The company started delivering Polestar 2 sedans to Hertz in early June.

The terms of the sale weren't disclosed, but Polestar 2 vehicles normally start at $53,950. If Hertz was paying full price for 65,000 Polestar 2 cars, the order would be worth $3.5 billion (but I’m pretty certain Hertz got a bit of a deal).

“Our partnership with Hertz is an exciting milestone that provides the opportunity for a significant number of potential new customers to experience an EV for the first time, and it will be in a Polestar,” said Thomas Ingenlath, Polestar Automotive Holding UK PLC's CEO.

“With over 55,000 Polestar cars already on the road across our 25 live markets there is no doubt that our brand is growing at an incredible pace.”

Polestar Automotive Holding UK PLC Reports Big Sales Increase & Reaffirms Guidance

On July 13, Polestar Automotive announced that it had delivered 21,200 EVs in the first half of 2022, more than double the 9,510 vehicles it delivered in the same period of last year. (Source: “Polestar Reports 125% Sales Increase for First Half of 2022 and Reaffirms Sales Guidance for Full Year,” Polestar Automotive Holding UK PLC, July 13, 2022.)

The company's global orders in the first six months of 2022 rose to 50,000, a 350% increase from the same period of 2021. Thanks to this robust performance, Polestar Automotive reaffirmed its full-year target of delivering 50,000 EVs.

That business growth shouldn’t be a total surprise. Polestar Automotive Holding UK PLC expanded its global presence in the first half of 2022 from 19 to 25 markets. Meanwhile, the number of its retail locations grew from 103 to 125.

The big increase in its retail presence helped fuel the number of its test drives by more than 210%, which is a key indicator of growing consumer interest.

The company expects to open approximately 30 more dealerships by the end of this year.

The next major step for Polestar Automotive Holding UK PLC will be its entry into the SUV segment with the global launch of the Polestar 3.

Ingenlath noted, “Polestar 3 will stand out amongst other SUV offerings and boost our growth trajectory. It also represents the expansion of our manufacturing footprint into the United States as we become even more global. It is an important next step towards our goal of selling 290,000 cars in 2025 – ten times more than we sold in 2021.” (Source: Ibid.)

Lots of great things are going on at Polestar Automotive Holding UK PLC, but Polestar Automotive stock hasn't been making newsworthy moves. Well, it did have a massive spike on the day it went public, but since then, PSNY stock has come down to where it was before its initial public offering (IPO).

As of this writing, Polestar Automotive stock is down by:

• 1.5% over the last month
• 16% over the last three months
• 11% year-to-date
• 15% year-over-year

Chart courtesy of StockCharts.com

No analysts are currently covering Polestar Automotive Holding UK PLC, and since it has a very short history as a public company, it’s difficult to determine what kind of potential PSNY stock has.

Polestar Automotive stock has rallied since the company posted great year-to-date sales numbers, confirmed its full-year guidance of EV deliveries, and said that it expects to sell 290,000 EVs in 2025 (10 times what it sold in 2021).

Therefore, a 12-month share-price target for PSNY stock of $15.25, which implies upside potential of 55.4%, is certainly within reach.

Analyst Take

Although Polestar Automotive Holding UK PLC is newly listed on the stock market, the company has been selling EVs for the last few years and expects to significantly ramp up its production over the coming years.

As mentioned earlier, the company delivered 21,200 EVs in the first half of 2022, a 125% increase over the first half of 2021. It has also reported high customer demand. Polestar Automotive reaffirmed its full-year 2022 guidance of delivering 50,000 vehicles and announced its expectation of selling 290,000 in 2025.

With all this, Polestar Automotive stock could be one to watch.