Shares of Polestar Automotive Holding (NASDAQ:PSNY) surged 15.8% in their Nasdaq debut on Friday. The Swedish premium electric-vehicle (EV) maker joined the public markets via a merger with a special-purpose acquisition company (SPAC), which was announced in September.
Polestar -- founded as a racing company -- was formerly the performance-car unit of Sweden's Volvo, which is owned by China's Geely Automobile Holdings. Volvo retained a large stake in Polestar following the SPAC merger.
Polestar touts that it and Tesla (TSLA -2.96%) are "currently the only EV pure plays with mass production and global reach."
The SPAC merger added cash of $890 million to Polestar's balance sheet. The company plans to use the proceeds to expand geographically and launch new vehicle models.
Polestar 2, the company's first all-electric vehicle. Image source: Polestar.
Polestar's business
The first vehicle that Polestar produced was the Polestar 1, a plug-in hybrid performance sports car with a price tag in the low six figures. This vehicle was made in limited quantities between 2019 and 2021.
The company currently mass-produces the Polestar 2 (which is stunning, in my opinion), its first all-electric car. Its starting manufacturer's suggested retail price in the U.S. is $40,900 after the $7,500 maximum federal tax credit is applied, and it gets up to 270 miles per charge, according to Polestar's website.
In 2021, Polestar sold a total of about 29,000 vehicles, and is aiming to increase this number tenfold by 2025. It plans to accomplish its aggressive growth by launching three new models by 2024, and expanding its geographic sales markets from 23 in April 2022 to over 30 by 2023.
This year, the company plans to begin production of the Polestar 3, a premium all-electric sport utility vehicle. It is slated to be manufactured at a Volvo factory in South Carolina and in China.
Polestar's financials
In 2021, Polestar generated revenue of $1.3 billion. It's targeting revenue of $17.6 billion by 2025, which would equate to a 92% compound annual growth rate.
The company expects to be profitable on the basis of earnings before interest and taxes (EBIT) by 2024, thanks to its targeted aggressive sales growth and asset-light business model. It's aiming to achieve an EBIT margin of 8% by 2025. It also expects to generate positive adjusted unlevered free cash flow by 2025.
Polestar stock is worth a place on your watch list
Competition in the EV space continues to heat up. But Polestar is different from most other manufacturers in that it's an EV pure play that's already in mass production. It's even more differentiated when you consider that it has an asset-light business model, as it uses production and other infrastructure owned by Volvo Cars and Geely.
Stay tuned -- I'll soon be covering Polestar's competitive advantages, including expounding on its asset-light business model, which is unusual in the capital-intensive auto industry.
Polestar stock looks to be worth watching. As with all newly public companies, most investors should wait to see how it performs in at least its first few quarters as a publicly traded entity to make an investing decision.
