Polestar Q1 Earnings Preview: Analyst Says Chinese EV Manufacturing Equals 'Better Gross Margins'

Electric vehicle company Polestar Automotive Holding PSNY will report unaudited first-quarter financial results on Tuesday, July 2.

The company will also report second-quarter global volumes on Tuesday.

Earnings Estimates: Analysts expect Polestar to report first-quarter revenue of $737.57 million according to data from Benzinga Pro.

The company missed analysts' revenue estimates in three straight quarters.

Analysts expect Polestar to report a loss of 12 cents per share. The company beat analysts' estimates for earnings per share in three of the past four quarters.

Polestar recently shared 2023 preliminary results, which included recognizing non-cash impairment charges of around $450 million related to inventory and Polestar 2 assets.

Fiscal year 2023 revenue was $2.38 billion, down 3% year-over-year.

Polestar had deliveries of 54,626 in 2023, up from 51,491 deliveries in 2022 and above company guidance of 50,000.

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What Analysts Are Saying: Polestar's revenue declines were driven by increased discounts and lower sales of carbon credits, Cantor Fitzgerald analyst Andres Sheppard highlighted in a new investor note.

The analyst, who has an Overweight rating and $5 price target, told investors to recall that Polestar pre-announced around 7,200 deliveries in the first quarter.

This total was below consensus estimates and last year's first-quarter total of 12,076, the analyst said.

Sheppard also highlighted the company's cash balance with around $769 million reported at the end of the fiscal year.

"Recall that Polestar previously secured ~$950M in external funding, which the company plans to use to finance the next stage of its vehicle development," Sheppard said.

Sheppard said Polestar has a goal of raising $1.3 billion in external funding in fiscal 2024, with $950 million already raised. The remaining $350 million expected to be raised could be an item to watch.

"We believe Polestar benefits from: the support of Volvo and Geely, manufacturing in China, which results in more competitively priced electric vehicles and in better gross margins."

Citigroup reiterated a Neutral rating on Polestar and lowered the price target from $2.5o to $1.70 in May.

Key Items to Watch: Polestar said it recently started deliveries of the Polestar 3 electric vehicle with plans to ramp up deliveries over the summer.

The company also said production in South Carolina is on track to start by the end of summer 2024.

Polestar is also working on expansion with plans to target France, Czech Republic, Slovakia, Hungary, Poland, Thailand and Brazil through local distribution partnerships.

"Expanding our retail operations with new and existing partners will enable us to reach more customers. Through these partnerships and expansion, we will capitalize on our strong brand and growing model line-up," Polestar CEO Thomas Ingenlath said.

Polestar went public in June 2022 after a SPAC merger was announced in 2021. The company is one of several electric vehicle companies that were viewed as potential disruptors for the sector and market leader Tesla, but have failed to deliver on lofty expectations.

PSNY Price Action: Polestar shares are up 21.76% to 96 cents on Monday versus a 52-week trading range of $0.65 to $4.96. Polestar stock is down 76% over the last year and down 61% year-to-date in 2024.

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