Shares of Swedish premium electric-vehicle (EV) maker Polestar Automotive Holding (PSNY 5.09%) fell 35.3% in September, according to data from S&P Global Market Intelligence. For context, last month, the S&P 500 and Nasdaq Composite indexes declined 9.3% and 10.5%, respectively.
The stock's drop last month is likely largely attributable to market dynamics.
Polestar just went public in June. It had been the performance-car unit of Sweden's Volvo Cars, which is owned by China's Geely Automobile Holdings (GELYF -0.98%).
Polestar didn't release any market-moving bad news last month. On Sept. 9, Redburn, a European equities research and financial services firm, initiated coverage of the stock with a sell rating. But that didn't hurt shares; in fact, they rose following this move.
Market dynamics were probably the primary culprit behind the stock's poor performance last month. September was terrible for the market in general, as reflected by the index performances previously mentioned. Particularly hard hit were stocks that investors consider more speculative or risky, including companies that aren't profitable, such as Polestar.
Moreover, as with other newly public EV makers, there are uncertainties surrounding Polestar concerning demand and ability to scale up production.
Tesla, however, is another story. The company is established and profitable. Not surprisingly, its shares only declined 3.8% in September, so they outperformed the broader market.
EV maker Rivian Automotive bucked last month's downtrend, as shares edged up 0.6%. Like Polestar, it's also in the early stages of ramping up production, new to the public markets (or relatively new -- it went public last November), and not profitable. However, it was able to eek out a small gain in September because shares popped nearly 11% on news of its partnership with Mercedes-Benz.
In July, when it released its first-half delivery numbers, Polestar reaffirmed its full-year target of delivering 50,000 cars. This annual guidance represents a 72% increase from 2021, when the company delivered about 29,000 vehicles.
In the first half of the year, Polestar delivered about 21,200 vehicles, up 123% from the year ago. That means it needs to deliver about 28,800 in the second half of the year to achieve its 2022 production guidance. This seems very doable.
Investors should focus on three main things in the company's future earnings reports. The first is customer demand, which will be reflected in pre-order or order numbers. The second is the company's progress in scaling up production, which will best be reflected in production numbers. If the company doesn't provide production numbers, delivery numbers will do.
Third, investors need to keep close tabs on Polestar's cash-burn rate relative to its cash position.