Written by Cláudio Afonso | LinkedIn | X
Following the first quarter financial results and the second quarter deliveries announced on Tuesday, Cantor Fitzgerald’s analyst Andres Sheppard published a new research note on Wednesday slashing Polestar’s price target to $3.
Polestar shares dropped 1.60 percent on Wednesday closing at $0.89 per share. Despite the cut, Cantor’s price target still represents an upside potential of 237 percent.
Mentioning “slower-than-anticipated vehicle sales ramp” and “fewer Hertz deliveries,” Sheppard reduced the price target by 40 percent from $5 while cutting full year delivery estimates for 2024 and 2025.
“We reiterate our Overweight rating, but we lower our price target to $3 (from $5), following a slower-than-anticipated vehicle sales ramp, lower gross margins, fewer Hertz deliveries, and additional outstanding liquidity needs,” the analyst wrote.
Polestar, the Geely-backed electric vehicle (EV) maker, reported concerning first-quarter financial results on Tuesday despite better-than-expected sales numbers for the second quarter.
The firm is also lowering its annual revenue estimates by about 20 percent and gross margins estimates by over 60 percent.
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“For FY24, we are lowering our vehicle delivery estimate to 60,000 (from 85,000, previously), and we are also lowering our FY25 vehicle delivery estimate to 140,000 (vs 160,000, previously). As a result, we are lowering our FY24 and FY25 revenue estimates to $2,974.5M, and $8,944M respectively, from $5,570.4M and 11,126.6M, respectively,” Sheppard wrote.
“We are also lowering our FY24 gross margin estimate to (-2.5%) (vs. 7% previously), and lowering our FY25 gross margin estimate to 5.4% (vs. 11.6% previously),” he added.
The chief executive Thomas Ingenlath expressed confidence in Polestar’s future, highlighting strong product reviews.
“Our two new SUVs have received stellar reviews and test drive slots are booked out. Our retail model shift is in execution, and we have strengthened our sales management team significantly,” Ingenlath said.
Revenue for Q1 2024 declined by 36% year over year to $345.3 million, compared to $543.4 million in the same period of 2023.
Starting from last year, Polestar has implemented several strategic cost and headcount reductions to improve efficiency.
“We initiated two rounds of strategic cost and headcount reductions in mid-2023 and then followed up with another one in early 2024. We are starting to see the benefit come through now,” the CFOAnsgar noted.
Written by Cláudio Afonso | LinkedIn | X
