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Polestar IPO

How to trade Polestar’s IPO

Swedish electric car company Polestar, which is part of the Volvo Group and backed by Leonardo DiCaprio, has announced a merger with blank-check company Gores Guggenheim, which could be completed at some point in September 2021. Learn about Polestar’s financials and how you can start trading on Gores Guggenheim [GGPI] today, which will give you exposure to the Polestar SPAC merger.

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September 2021

Polestar going public

$20bn+

Polestar’s valuation

$800m

Funds raised for IPO

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What does Polestar do and who is it merging with?

Polestar is a Swedish electric vehicle (EV) manufacturer with headquarters in Gothenburg. It was established in 1996 by a partner of Volvo Cars and acquired in 2015 by joint parent companies Volvo and Geely. Polestar produces high-performance electric cars with a focus on design and cutting-edge technology, and also offers performance hardware upgrades and engine software optimisations. It creates both hybrid and fully electric vehicles.

Polestar is set to merge with special purpose acquisition company (SPAC), Gores Guggenheim, which is part of The Gores Group, a private equity firm that has invested over $4bn in equity capital so far. It was founded in 1987 and has completed over 120 transactions worldwide.

Start trading on our Gores Guggenheim [GGPI] share price​.

When is Polestar’s IPO/SPAC merger date?

Polestar and Gores Guggenheim are currently in the process of completing the SPAC merger, which could be as early as the end of September. You can already trade on the SPAC stock but if you want to wait for Polestar to complete its transition, then keep an eye out for relevant news and announcements. Sign-up below to receive an email when Polestar officially merges with its blank cheque company.

What will Polestar’s share price be?

Polestar will take on the share price of Gores Guggenheim, which is currently trading at around $10 per share.

The SPAC raised over $750m back in May 2021 when it debuted on the Nasdaq exchange, offering 75 million shares to the public at $10 apiece. Each unit consists of one share of common stock and one-fifth of a warrant, exercisable at $11.50.

What is Polestar’s valuation?

According to Financial Times, the company is estimated to be worth around $20bn including debt. The deal will rank Polestar as one of the most valuable electric vehicle manufacturers to list through a SPAC.

Polestar will receive the $750m of funds raised by Gores Guggenheim earlier this year as well as $250m of cash from a private investment in public equity transaction, which is a type of fundraising that often comes with a SPAC deal. The transaction values Polestar at 3x its forecasted revenues for 2023. Polestar privately raised around $500m from investors in April 2021, which was separate from GGPI’s funding.

How to trade on the Polestar IPO/SPAC

1. Open an account

You can trade on 10,000 shares within our product library, including Polestar’s competitors and parent company Geely [0175].

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2. Choose your product

Spread betting is our most popular product, and it is tax-free in the UK and Ireland*, while share CFDs do not require you to pay stamp duty and are available globally.

3. Pick a strategy

Choose whether you want to go long (buy) or go short (sell). Please note that some trading restrictions may apply on initial trading.

4. Consider risk-management

The IPO/SPAC market can be a volatile place to trade, so it may be wise to add risk-management controls to prevent losses.

Read about stop-loss orders

How are Polestar’s financials?

It is difficult to perform company analysis on Polestar over the years as it hasn’t released any specific financials in its annual reviews, instead focusing on its technology structure and future plans. For hopeful investors, this may change in the run up to a public listing and Polestar may release more concrete numbers so that investors can weigh up the pros and cons of trading on its SPAC listing.

According to Wccftech, the company earned approximately $645m in revenue in 2020, a growth of over 600% relative to 2019 earnings. If Polestar is valued at over $20bn upon listing, this means that it is valued around 38x its 2020 revenue, which is an impressive achievement.

In terms of sales, according to Carsalesbase.com, the company sold 8,746 of the Polestar 2 model in 2020, although it is now targeting an average of 50,000 sales in the next few years. For comparison, Tesla delivered 442,511 of its Model 3 in 2020, which suggests that Polestar has some catching up to do to reach its competitors’ levels.

Please remember that past performance is not a reliable indicator of future results.

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Potential benefits of Polestar’s IPO/SPAC

Polestar has announced plans to start manufacturing in the US in order to achieve a wider international audience. For example, its electric SUV, the Polestar 3, should begin production at Volvo’s plant in South Carolina by 2022.

The company’s IPO/SPAC comes at a time when environmental, social and corporate governance (ESG) investing is an increasingly growing trend. According to Statista, the percentage of assets that are invested sustainably is expected to increase between 18% in 2020 to 37% in 2025. Polestar itself aims to create a carbon-neutral car by 2030.

Polestar aims to invest the funds raised through its IPO/SPAC into research and development, including new battery technologies and autonomous driving systems. It has also agreed to build a battery Gigafactory in Europe with fellow Swedish battery developer Northvolt, along with producing research energy cell technology. The plant will have a capacity of 50 gigawatt-hours per year, or the equivalent of batteries for 500,000 cars, as reported by Financial Times.

Potential risks of Polestar’s IPO/SPAC

In May 2021, Bloomberg reported that five EV manufacturers that had listed by a SPAC lost a combined $40bn in value. Reasons for this may include a rise in short sellers, changes to management, and execution not meeting expectations. This may dampen investor sentiment for the EV market but remember that past performance isn’t always a reliable indicator of future results.

The company currently manufactures in China, which means that it faces import duties and high taxes when exporting to the US. However, as it is planning to move the majority of its operations to the US, this may get help to eradicate the tax issue.

In October 2020, the company was forced to recall all of its Polestar 2 electric cars in order to replace faulty battery inverters in a software glitch that caused vehicles to lose power while driving. Throughout Europe and China, over 4,000 vehicles were recalled in total, according to Autocar. However, this is a fairly common issue with new electric car distribution, as similar situations have happened with Fiat and Volkswagen models.

FAQ

How can I trade on Polestar stock?

You can first start trading on Gores Guggenheim [GGPI] stock by opening an account​ with us, which will give you exposure to the upcoming merger. Choose whether you want to spread bet or trade CFDs and pick a strategy that works for you.

What will be Polestar’s stock symbol?

When the SPAC merger​ is complete, the company will be listed on the Nasdaq exchange under the new combined company name Polestar Automotive Holding UK Ltd, with the ticker or stock symbol “PSNY”.

Is Polestar owned by Volvo?

Polestar is controlled by two companies, privately-owned Volvo Cars and its holding company, Geely. Volvo Cars is expected to have its own initial public offering at some point in 2021, so keep an eye out for upcoming IPOs​ and new stocks that will be available to trade later on.

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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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