Events in the e-mobility sector are currently overflowing. The EU recently surprised us with its proposal to ban the sale of combustion cars from 2035. The sports car icon Ferrari presented its electric plans at almost the same time, and the e-startup Polestar hit the stock market just a few days later. The latter in the truest sense of the word: Shares in the company, which was launched in 2017 as a joint venture between Swedish carmaker Volvo and China's Geely, started June 24 at a price of USD 12.98, up 15.5% from the SPAC company's closing price before the merger. By way of background, Polestar slipped into the shell company "Gores Guggenheim" and is now listed on the Nasdaq in New York under the ticker symbol "PSNY".
Polestar is not the first electric startup to achieve a listing via SPAC deal. Lucid, Fisker and Nikola, as well as Rivian most recently, have already taken this fast route to the capital market. After initial price successes, however, the stocks began to show signs of slowing down. Currently, the young companies are trading below their respective initial public offerings. However, this is probably due less to the potential of the startups than to the decreasing risk aversion of investors in the wake of the weakening stock markets.
The fact that Polestar is daring to enter the stock market despite the recent price capriciousness can certainly be seen as a sign of strength. The Swedes benefit from the fact that they have an experienced and financially strong duo in the background. Volvo Cars and its owner Geely still own 48% of the shares. At the operational level, Polestar is currently stepping on the gas. Last week at the Goodwood Festival of Speed 2022, the Swedes unveiled the new Polestar 5. This is a four-door GT with an 800-volt architecture that can produce over 650 kW (884 hp). The plan is to bring the vehicle to market in 2024. Along with the two Polestar 3 and Polestar 4 models, it is the third e-car the company will launch in the next three years. Polestar 3, which will be produced in the U.S. and China, is the group's first SUV and will make its world debut this October. Number 4, in turn, is a crossover SUV and coupe that is expected not only to electrify the roads in 2023 but also to heat up the competition.
So CEO Thomas Ingenlath's motto is a new model every year. So far, there are two electric cars in the range that are enjoying high demand. The Swedes delivered 29,000 vehicles worldwide last year, an increase of 185% over the previous year. Expansion into new countries contributed to this. In 2021, the company expanded its global presence from ten to 19 markets. Six additional regions have already been added in the first half of the current year. This brings Polestar rapidly closer to its goal of being active in at least 30 markets by the end of 2023. "More than 55,000 Polestar vehicles are on the road worldwide today, and we are launching a portfolio of three new models in just three years," says a satisfied Ingenlath.
The 58-year-old manager can also be happy about the current order backlog. This amounts to a record level of more than 75,000 vehicles per year. By the end of 2025, Polestar plans to increase annual sales to around 290,000. The earnings outlook is particularly impressive in this context. The Gothenburg-based company aims to be profitable before the middle of the decade.
The current business trend is already pointing in the right direction: in the first half of the year, the carmaker received more than 32,000 orders for the Polestar 2, an increase of 290% over the previous year. The company is also benefiting from a recent large order from Hertz. The car rental company ordered 65,000 vehicles for the next five years. The first cars were already delivered at the beginning of June.
Even though Polestar's share price suffered the same fate as its competitors shortly after the IPO and fell below its initial value, it is by no means the end of the day. However, the fluctuations show that investments in e-car startups are definitely risky. Investors can participate in the opportunities of the newcomer with conditional partial protection. For this purpose, Leonteq has structured two barrier reverse convertibles on Polestar, with which above-average returns can already be achieved in a sideways movement. With a maximum term of one year and a risk buffer of a comfortable 45%, a return of 12.00% p.a. is possible with the CHF version. The USD-denominated product even offers a coupon of 15.00% p.a.
The Multi-BRC on Geely, Polestar and Volvo promises even higher returns. The product, which is denominated in Swiss francs and combines the entire Polestar family, has a coupon of 17.00% p.a.. As with the single BRCs, the barrier is fixed at 55% of the initial levels. For all three products, a soft call occurs for the first time after 6 months.
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