Polestar expects to ship 50,000 electric vehicles in 2022 and 124,000 in 2023.
Electric vehicle maker Polestar, which is being spun off from Volvo Car (ticker: VOLCARB.Sweden), should start business with a large enterprise value starting Friday.
Polestar agreed to merge with Gores Guggenheim (GGPI), a special purpose acquisition company, or SPAC, in September 2021. Now the process of merger is almost complete. The deadline for shareholders to vote on the merger is Thursday and, if all goes as expected, Pollstar will trade Friday.
Investors holding GORAS would place Polestar under the new stock symbol “PSNY”.
The deal values Polestar at approximately $21 billion, based on the approximately 2.1 billion shares outstanding after the close of the deal. That’s roughly the $20 billion net that the merger would bring to Polestar’s books.
That enterprise value is higher than Rivian Automotive (RIVN). Rivian has a market cap of about $27 billion, but the value of Rivian Enterprise — its market cap adjusted for cash and debt — is about $12 billion.
The market is treating Polestar as a serious EV player. There are some good reasons for that.
For starters, the company is shipping the cars. Polestar shipped around 13,600 units in the first quarter. It expects to ship 50,000 units in 2022 and 124,000 EVs in 2023. For comparison, Rivian is expected to deliver around 25,000 vehicles in 2022 and 86,000 in 2023.
Polestar also has two manufacturing facilities in China. One is in Taizhou, Zhejiang Province, and the other is in Chengdu, Sichuan Province. The Taizhou plant was acquired by Volvo from Geely in December 2021.
Geely-related entities hold approximately 84% of the stock in Volvo Cars. Swedish-listed Volvo Car stock is still traded separately.
Volvo Car holds about 48 percent stake in Polestar. Its stake is worth about $10 billion. Excluding the Polestar price from Volvo Cars, its stock trades at about 8.5 times expected 2022 earnings. Volkswagen (VOW3.Germany) stock, for comparison, trades for about 4.4 times expected 2022 earnings.
In Tuesday’s trading, Gores’s stock is trading at around $10 a share. This is the same price at which the merger deal was done. That’s not bad considering what’s happened with EV valuations in recent months. Tesla (TSLA) stock is down about 8% since the end of September during the comparable period. The S&P 500 is down about 15% and the Nasdaq Composite is down 26%.
Polestar stock, following the merger, will trade at approximately 3 times projected 2023 sales.
This multiplier is at the upper end of the range among EV start-ups worth over $10 billion. The Polestar multiple is better than the Rivian as well as the NIO (NIO), Li Auto (LI) and XPeng (XPEV). It is not as high as Lucid (LCID).
EV leader Tesla is trading at 6.4 times projected sales of about $116 billion in 2023.
Write to Al Root at [email protected]