Why Polestar Automotive Stock Crashed 20% After Its Reverse Stock Split This Week

Core Viewpoint - Polestar Automotive's stock has plummeted over 95% from its all-time highs, struggling to generate profit and facing significant financial challenges [2][3]. Company Performance - Polestar's shares recently dropped 19% in a week, reflecting ongoing struggles to achieve profitability and a need for a reverse stock split to maintain its Nasdaq listing [2][5]. - The company has a current market capitalization of $27 billion, with a stock price of $2.56, down from a 52-week high of $42.60 [4]. - Last quarter, Polestar reported a 48% year-over-year revenue growth to $2.1 billion, but it has negative gross margins and burned $1.6 billion in free cash flow over the past year [6]. Industry Context - The electric vehicle sector is experiencing a boom and bust cycle, with Polestar facing intense competition and losing market share [2][8]. - The company initially raised $890 million through a SPAC to fund growth plans, but these plans have not materialized as expected, leading to a bearish outlook from investors [4][5].