Polestar Automotive (PSNY, Financial) stock surged today, rising 14.29%. The Swedish electric vehicle (EV) manufacturer reported a significant sequential rise in Q2 deliveries, one day after CEO Thomas Ingenlath's sudden resignation.
Polestar's deliveries jumped 82% to 13,150 cars in Q2 compared to Q1. Despite this, the company's revenue decreased by 26% year over year to $918 million due to a 17% decline in deliveries and increased discounts to boost sales amid growing competition. The company reported a negative gross margin of 3.2% in Q2, down from 1.7% a year earlier.
However, Polestar reduced its inventory by nearly 30% in Q2 compared to Q4 2023 and cut its operating loss by 6% to approximately $466 million.
Polestar anticipates a stronger second half of 2024, driven by the introduction of two new cars. The company has started delivering the Polestar 4 SUV coupes in Europe and plans to begin deliveries of the Polestar 3 SUV in the coming weeks. The Polestar 3 will be the first car manufactured in the U.S., with production of the Polestar 4 set to begin in South Korea in 2025.
Michael Lohscheller, who previously led Opel, VinFast Auto, and Nikola, has been appointed as Polestar's new CEO, effective Oct. 1.
From a valuation perspective, Polestar Automotive (PSNY, Financial) is currently trading at $1.08. The company has a market cap of $2.28 billion and an EV (Enterprise Value) of $4.80 billion. The stock's GF Score is 16, indicating it is currently not favorable according to our metrics. For a deeper dive into the company's GF Value, visit our dedicated page.
While the Beneish M-Score of -4.13 suggests that Polestar is unlikely to manipulate its financial statements, the company's financial strength remains poor, as indicated by a distressing Altman Z-score of -0.39. This implies a possibility of bankruptcy in the next two years.
Moreover, Polestar's revenue per share has declined over the past 12 months, and the company has been issuing new debt, accumulating $3.3 billion over the past three years. The negative gross margin and significant operating losses also accentuate the company's struggle in the competitive EV market.
Despite these challenges, Polestar's reduction in inventory and the introduction of new models could provide a potential upside. However, investors should be cautious, considering the company's financial instability and poor earnings quality.
