Polestar Automotive Stock: Buy, Sell, or Hold?

Company Overview - Polestar Automotive is an electric vehicle (EV) maker backed by Geely's Volvo, producing high-end EVs including the Polestar 2, Polestar 3, and Polestar 4 [2] - The company went public via a SPAC merger in June 2022, with its stock opening at nearly $13 but now trading at about $1.30 per share [1] - Polestar plans to launch the Polestar 5 GT and Polestar 6 electric roadster in 2025 and 2026, respectively [2] Financial Performance - Polestar's revenue fell 3% to $2.38 billion in 2023, while its net loss more than doubled from $466 million to $1.17 billion [3] - The company received a delisting warning from Nasdaq after its stock dipped below $1 [3] - Analysts expect revenue to rise 15% to $2.75 billion in 2024 and surge 146% to $6.77 billion in 2025, with net losses narrowing to $1.03 billion in 2025 [4] Deliveries and Market Expansion - Polestar's deliveries surged 80% to 51,491 vehicles in 2022 but only increased 6% to 54,626 vehicles in 2023 [2] - Deliveries declined 23% year-over-year to 32,300 vehicles in the first nine months of 2024 due to supply-chain constraints and software issues [2] - The company plans to enter seven new markets in 2025 and aims to deliver about 155,000 vehicles that year [4] Valuation and Growth Potential - Polestar trades at 1.6 times this year's sales and less than one times next year's sales, with an enterprise value of $4.52 billion [5] - The company believes it can achieve a positive gross margin by Q4 2024 and reach cash flow breakeven by the end of 2025 [5] Challenges and Risks - Polestar faces significant net debt of $2.79 billion and ended its latest quarter with only $669 million in cash and equivalents [6] - The company's reliance on Chinese manufacturing exposes it to rising tariffs on Chinese-made EVs in the U.S. and Europe [6] - Expanding production in the U.S. and South Korea could drive up operating costs and compress gross margins due to pricing pressure in the EV market [6] Strategic Outlook - Polestar's stock is considered risky due to its ambitious goals, high debt, and competitive pressures in the luxury EV market [7] - The company has not yet proven its ability to scale up its business or differentiate itself from high-end competitors [7]