Polestar (PSNY) shares floated on NASDAQ after SPAC . merger

Shares in Polestar It debuted on the public market under the “PSNY” symbol on Friday, making it the latest electric vehicle maker to go public through a merger with a Special Purpose Acquisition Company, or SPAC.

Polestar shares began trading on the Nasdaq stock exchange one day after its merger with SPAC Gores Guggenheim was completed. Shares of the electric car maker ended the day at $13.00, 15.8% higher than SPAC’s final closing price on Thursday.

Polestar CEO Thomas Ingenlath said the company will use the $890 million raised from the deal to fund its three-year plan to build new cars and eventually become profitable.

But Ingenlath said Polestar, which started as a joint venture between Sweden’s Volvo Cars and Chinese auto giant Geely in 2017, has progressed beyond the start-up phase.

“We advertise our business as a working, successful company — not raising capital to build a company,” Ingenlath told CNBC in a recent interview. “That’s because the next three years will be very rapid growth, and the company is ready for that with the product portfolio.”

SPAC deals have become a more popular way for companies to go public in recent years. The required disclosures are simpler than those in a traditional initial public offering. Unlike a traditional initial public offering, companies participating in a SPAC merger are allowed to present forward-looking projections to investors, which can help justify a large valuation. But there is no guarantee that those expectations will come true.

So far, most of SPAC’s merger with electric car companies has not yielded good results for investors. Even the relatively more successful cases of Lucid Group, Fisker and Nikola are currently trading at 67%, 69% and 92% below their post-merger highs, respectively. Rivian, the maker of EV trucks, which went public with a traditional initial public offering, has also struggled. Its shares are down 84% from their post-IPO high.

But Polestar can have many advantages over competitors. Volvo Cars still owns 48% of the company, and Polestar already has more than 55,000 vehicles on the road in China, Europe and the United States. It has a working plant in China and an assembly line due to start production later this year at a South Carolina plant joint with Volvo.

Over the next three years, the company plans to add three cars to its current model, the Polestar 2 compact model in China. Extras are a large SUV, the Polestar 3; mid-size crossover, Polestar 4; and a large sedan, the Polestar 5, which is intended to serve as the brand’s flagship vehicle.

They will all be fully electric and will all be shown in the United States, Europe and China. Polestar plans to build its vehicles in all three regions. By the end of 2025, Ingenlath expects its three-year Polestar roadmap to lead the company to annual sales of approximately 290,000 vehicles.

Enginlath said Polestar may need to raise more cash before it becomes profitable — a milestone he expects to reach before 2025. If so, he said the company would likely issue bonds rather than sell more shares.

Enginlat said the company’s plan is on track so far. It has received more than 32,000 orders for the Polestar 2 since the beginning of the year, with these orders arriving from 25 different countries. Polestar also secured an order from car rental giant Hertz to buy 65,000 vehicles over the next five years, a deal Ingenlath said is primarily aimed at giving consumers a chance to try out the company’s electric vehicles.

Polestar’s plan is to have sales and service networks in 30 countries by the end of next year, but Ingenlath said the company will likely reach that milestone soon.

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