Polestar Stock and IPO: How To Buy Polestar Before the IPO
Polestar is a premium electric vehicle (EV) maker expected to go public sometime in the first half of 2022. The company has a lot of potential for future growth amid the rapidly expanding global EV market. Below, we take a closer look at the carmaker and its plans to go public.
Matt Johnston Updated March 25th, 2022
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What does Polestar do?
Polestar is a premium EV maker based in Sweden. Its focus on making high-performance electric cars puts it in competition with premium EV makers Tesla Inc (TSLA) and Lucid Group Inc (LCID). The company launched its Polestar 2 model to compete directly with Tesla’s Model 3. Polestar even markets itself as the only global pure-play EV maker next to Tesla.
Founded in 1996 under the name “Flash Engineering,” Polestar was supposed to build a race car to help the Volvo racing team win the Swedish Touring Car Championship. The plan worked. Flash Engineering and Volvo won the first two years of the competition and went on to compete in more races at the international level, with even more success.
The company released several public production models over the next several years, including the Volvo S60 Polestar in 2013 and the Volvo S60 and V60 in the following year. Volvo acquired Polestar in 2015 to build on the success of these early models.
In 2017, Volvo and Geely established Polestar as a standalone premium EV manufacturer.
In 2019, Polestar launched the Polestar 1, a premium performance hybrid vehicle. The fully-electric Polestar 2 launched a year later. The company plans to begin production of two all-electric SUVs—the Polestar 3 and Polestar 4—in 2022 and 2023, respectively. The Polestar 3 is a luxury SUV; the Polestar 4 is a less expensive SUV. In 2024, Polestar aims to start producing the Polestar 5, a premium electric coupe.
When will Polestar go public?
In late September 2021, Polestar said it would go public sometime in the first half of 2022 by combining with Gores Guggenheim Inc (GGPI). Gores Guggenheim is a special purpose acquisition company (SPAC).
SPACs, also known as blank-check companies, raise funds by going public through an IPO. The funds are used for the sole purpose of acquiring or merging with another company. Going public via a SPAC deal usually takes less time and faces fewer regulatory demands than a traditional IPO.
Gores Guggenheim raised about $800 million in an IPO last March. It then started talks in July with Polestar about a possible merger.
At the time of the announcement in September, the deal valued Polestar at an enterprise value of around $20 billion. That equates to about three times Polestar’s expected revenue in 2023 and 1.5 times in 2024.
The SPAC merger must first meet the approval of Gores Guggenheim shareholders before it closes. After it is complete, the newly combined company will be named Polestar Automotive Holding UK Ltd.
Polestar expects the transaction to generate $995 million of cash and plans to use the money to fund its current business plan and future model launches.
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How to invest in Polestar stock today
You can invest in Polestar by buying shares in Gores Guggenheim, the SPAC. Those shares will convert into shares of the combined company following the completion of the merger.
However, investing in a SPAC deal may be riskier than investing in a traditional IPO. One of the main risks of investing in a SPAC is fewer regulatory requirements for companies that go public through a SPAC deal than companies that do a traditional IPO. That’s also why SPAC mergers generally take less time to complete.
From the time a SPAC goes public, it has a timeline of three years to complete a business combination. Otherwise, it must return the funds in its trust account to shareholders. However, SPACs typically take two years to identify and complete a deal. In some cases, the SPAC process can take as little as three to five months. Traditional IPOs usually take between nine to 12 months.
Anytime a process is sped up, there are risks that proper due diligence has not occurred. If you invest in a SPAC, you are putting your faith in the management team of the SPAC. You are trusting that they understand the business of the target company.
What is Polestar’s stock symbol (ticker)?
Gores Guggenheim’s stock currently trades on the Nasdaq stock market under the ticker “GGPI.” Following the completion of the merger, the combined company is expected to trade on the Nasdaq under the ticker “PSNY.”
How much is Polestar stock?
Gores Guggenheim’s (GGPI) stock trades for $11.65 per share as of March 24, 2022. That price gives the company an expected equity value of approximately $21 billion.
Is Polestar stock a good investment?
Polestar is targeting a hot market: electric car sales reached 6.6 million in 2021, nearly double the sales in the year before. Climate change and government commitments to reach net-zero emissions are some of the factors driving the strong growth of the EV market. Polestar has a lot of growth potential in addition to the track record of success as part of Volvo.
However, EV stocks trade at high valuations, and many car manufacturers are yet to generate much revenue or produce a lot of cars. Unsurprisingly, most EV stocks are down in 2022. The Global X Autonomous & Electric Vehicles ETF (DRIV) is down 12% year-to-date. Tesla’s stock is down 15% since the start of the year, while Lucid’s is down as much as 35%.
SPAC EV makers also look like they might disappoint this year with lower than expected production. Lucid went public through a SPAC deal last July. When it announced its SPAC merger in February 2021, it projected it would generate $2.2 billion in sales in 2022. But analysts are forecasting the company’s total sales for the year to be about $1.3 billion. Other EV SPACs, such as Lordstown Motors (RIDE) and Fisker (FSR), are also expected to miss their projected sales numbers.
You should consider these risks when evaluating whether Polestar is a good investment.
Polestar stock alternatives
If you don’t want to invest in a SPAC, many EV companies (besides Tesla) are already publicly traded.
🔔 Learn more about publicly traded EV stocks.
NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.