Bernstein Analyst Thinks EV Maker Polestar Should Go Private

Research and brokerage firm Bernstein is of the opinion that Volvo Car AB and its parent company Geely might need to take Polestar Automotive Holding UK PLC PSNY private.

What Happened: Bernstein analyst Daniel Roeska suggested in a note that it’s not beneficial for Polestar to stay as a stand-alone equity, Bloomberg reported. “We would like to see the concept and brand survive, but think it would make more sense for Polestar to eventually fold back into the Volvo Cars-Geely ecosystem,” Roeska said while adding that he likes the cars.

When initiating coverage of Polestar, Bernstein rated the company as underperforming, with a target share price of $1.15, indicating a 44% downside.

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Why It Matters: Polestar delivered 54,600 cars in 2023, falling short of its target of 60,000 vehicles, and now expects a gross profit margin for the full year of around break-even.

Polestar, co-owned by Volvo, reported an operating loss of $735 million for the first nine months of 2023 and revenue of $1,844.4 million.

In an interview earlier this month, Polestar CEO Thomas Ingenlath reflected on the company’s sales over the past year and said, "The end of '23 was a particularly tough situation where the competition has gone to discounts at a level which we just simply said no to." However, premium brand consumers are less price sensitive, he said, while also expressing optimism for sales in 2024.

Polestar is set to begin European orders for its new Polestar 4 SUV coupe at the end of January and kickstart production of the Polestar 3 early this year after a delay.

Price Action: Polestar shares closed 0.5% higher at $2.10 on Tuesday. However, the stock slumped nearly 63% over the past year.

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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