$PSNY An EV Stock To Watch

15 ביוני 2023

Already down nearly 70% YTD, Polestar Automotive Holding UK PLC (NASDAQ: PSNY) announced an average 18.75% cut in its delivery target due to a delay in Polestar 3 startup production. Despite the negative news, PSNY appears to be on the right track financially given its efforts to cut costs in order to boost profitability. With its shareholders voting regarding a significant share buyback on June 28, Polestar stock could be poised to have a major run soon – making it one to watch closely this month.

PSNY Fundamentals

Delivery Cut

Joining other EV manufacturers like Fisker (NASDAQ: FSR) and Lucid (NASDAQ: LCID) in their 2023 cuts, Polestar announced that it cut its 2023 delivery estimates by 12.5% to 25% from 80 thousand deliveries to between 60 thousand and 70 thousand deliveries. Despite this cut in delivery estimates, PSNY is set to grow its deliveries YoY from the record 51.4 thousand it made in 2022 – representing a 16% to 36% increase.

The cut came due to a delay in Polestar 3 production since Volvo needs additional time to complete the software development for the new all-electric platform which is the basis of Polestar’s Polestar 3 software. Additionally, the cut can also be attributed to the tough market conditions the EV market is going through currently, especially since Polestar is not going to enter the price war Tesla (NASDAQ: TSLA) has started in the U.S. and Europe.

That said, Polestar announced that the delay will not affect Polestar 4 production plans and it will start production in Q4 2023 as planned. With the Polestar 3 going into production in early 2024, Polestar is going into 2024 with 2 new models which can lead to an extremely strong 2024 for Polestar stock.

Financials Improvements

On another note, Polestar is trying to improve its financial situation by decreasing operating costs which it has already succeeded in reducing by 13% YoY from $250 million to $217 in Q1 2023. Furthermore, Polestar announced a group wide hiring freeze and a 10% reduction in headcount in 2023, with further reductions in 2024. At the moment, administrative expenses make up the bulk of Polestar’s operating expenses so cutting them can get Polestar closer to profitability.

Potential Share Buyback

It is also worth noting that Polestar has asked its shareholders for approval to buy back 70 million shares which would effectively reduce Polestar’s float to approximately 190 million shares. The buyback, if approved, can increase Polestar stock’s value since more investors would be interested in buying the stock – putting upward pressure on the stock price. With the shareholders’ meeting set for June 28, Polestar stock could witness a run ahead of the vote.

PSNY Financials
In its Q1 2023 report, Polestar’s assets slightly increased by 1% QoQ from $3,942 million to $3,983 million, and its cash and cash equivalents decreased by 10% QoQ from $973 million to $884 million. Polestar’s total liabilities slightly increased by 1% QoQ from $4,076 million to $4,124 million.

Revenue also increased 20% YoY from $452 million to $546 million. Operating costs decreased almost 13% from $250 million to $217 million which contributed to the operating loss decrease of 23% YoY from $258 million to $199 million. In this way, PSNY reported a net loss of $8.9 million – a 96% YoY decline.

Technical Analysis

Polestar stock’s trend is neutral with the stock trading in a sideways channel between $3.23 and $3.45. It is also worth noting that the stock has recently broken into a new channel and is yet to consolidate. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is neutral at 59 and the MACD recently turned bearish.

As for the fundamentals, Polestar’s upcoming shareholders’ meeting is a major catalyst thanks to the vote on the 70 million shares buyback. Given the significance of this catalyst, Polestar stock could witness a strong run ahead of the meeting on June 28.

PSNY Forecast

While Polestar cut its 2023 delivery target by an average of 18.75%, the new target is still 25% more than the company’s record 51,491 deliveries in 2022. Polestar is also working on cutting operating costs by reducing headcount and improving efficiencies to improve its profitability prospects. Meanwhile, the upcoming vote regarding the 70 million share buyback is a major catalyst to watch as the stock could soar if the buyback is approved by shareholders. For these reasons, Polestar stock could be an attractive stock to buy at current levels.