Gores Guggenheim (NASDAQ: GGPI) is a special purpose acquisition company (SPAC) targeting EV company Polestar. In September 2021, Polestar announced its intention to list as a public company on the NASDAQ stock exchange in a business combination agreement with GGPI. The combined entity will be called Polestar Automotive Holding UK Limited with the ticker symbol $PSNY.
An IPO date is not yet set. But there's speculation it will be in the first half of 2022.
What is Polestar?
Polestar is a Swedish premium electric vehicle manufacturer founded in 2017 by Volvo Cars (STO: VOLV-B) and Geely Holding (HKG: 0175).
As the competitive EV landscape heats up, Polestar stands out as one to watch. Being a Volvo subsidiary gives it specific technological and engineering synergies with Volvo Cars. It also benefits from significant economies of scale as a result.
Meanwhile, Geely is one of china's most successful carmakers.
What are Polestar cars?
Polestar has produced two electric performance cars.
The Polestar 1 was built between 2019 and 2021 as a low-volume electric performance hybrid GT with a carbon-fiber body. It has the longest electric-only range (124 km) of any hybrid car in the world.
The Polestar 2 electric performance fastback is the company's first fully electric, high-volume car. The Polestar 2 model range includes three variants with a combination of battery range and dual- and single-motor powertrains.
During the next three years, Polestar plans to launch one new EV per year, starting with Polestar 3 in 2022 – the company's first electric performance SUV.
Polestar 4 is expected to follow in 2023, a smaller electric performance SUV coupe.
In 2024, the Polestar 5 electric performance 4-door GT is planned to be launched as the production evolution of Polestar Precept – the manifesto concept car that Polestar released in 2020 that showcases thebrand'ss future vision in terms of design, technology, and sustainability.
As the company seeks to reduce its climate impact with every new model, Polestar aims to produce a truly climate-neutral car by 2030.
Polestar's recent highlights:
In 2021 Polestar delivered over 29,000 vehicles meeting its global target.
Polestar increased its global presence from 10 to 19 markets throughout 2021.
It also doubled its retail footprint over the last year to 100 locations.
South Korea is Polestar's 19th global market and the latest to introduce the Polestar 2.
Over 4,000 reservations for Polestar 2 were placed in one week after order books opened in South Korea on 18 January 2022.
By 2023, the company plans to be present in 30 global markets. Polestar cars are currently manufactured in two facilities in China. The company hopes to add future manufacturing in the USA.
How does GGPI make money?
GGPI does not make money. It is a holding company, also known as a SPAC, designed to take a private company public. In this case, it's bringing Polestar public so that retail investors have the opportunity to buy shares in this hot new EV company.
Once the combination completes, PSNY financials will depend on the success of Polestar's business activity. Polestar makes money selling its electric vehicles but is not yet profitable.
Polestar aims to turn profitable in 2025, by which point it hopes to sell 290,000 vehicles.
Why is GGPI stock down?
A SPAC generally launches with a listing price of $10. The share price sometimes rises on speculation surrounding the potential target company. But it also falls depending on broader market sentiment and potential risks associated with the target business.
GGPI ownership
GGPI stock currently has 131 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold over 60 million shares. Largest shareholders include Magnetar Financial LLC, Millennium Management Llc, LH Capital Markets, LLC, Glazer Capital, Llc, Citadel Advisors Llc, Macquarie Group Ltd, Saba Capital Management, L.P., Jane Street Group, Llc, Marshall Wace, Llp, and Fort Baker Capital Management LP.
Is GGPI a good investment?
SPACs can be a risky way to invest. Their share prices often fall post-merger as early investors sell their shares for a profit. Polestar's fast growth trajectory and recent success give an optimistic view of the company's likelihood to enjoy a share price bump as GGPI becomes PSNY. Whether this will be short-lived or a long-term success story is hard to predict, particularly in a harsh trading environment.
GGPI stock is still trading close to the original SPAC value, reducing perceived risk. But it could fall further if bearish market sentiment prevails.
Nevertheless, the EV boom is set to continue for the next few years, and Polestar's association with Volvo gives it added credibility. Meanwhile, Polestar's ability to scale by producing its EVs in bulk gives it a competitive advantage. Many rivals in the space are still in very early stages of production.