Is Polestar Stock GGPI a Buy after Hertz deal?

By Kirsteen Mackay

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As investors eagerly anticipate Gores Guggenheim Inc (NASDAQ: GGPI) stock becoming PSNY, interest in Polestar shares grows.

Shares of Gores Guggenheim Inc (NASDAQ: GGPI) rose by 11.87% yesterday, thereby continuing its positive momentum with the price up 16.12% over the past year.

GGPI stock is the SPAC vehicle set to take Volvo’s Polestar public. The excitement surrounding the merger is gaining traction, and investors are growing impatient to own shares in Polestar.

Why is GGPI Stock Up?

GGPI stock soared yesterday on news that Hertz (NASDAQ: HTZ) has placed an order for Polestar cars.

The deal includes Hertz purchasing up to 65,000 electric vehicles (EVs) over five years. Availability is expected to begin in Spring 2022 in Europe and late 2022 in North America and Australia.

To begin with, the vehicle rental giant will order Polestar 2 vehicles, which come in three variations.

What is the Polestar 2?

The Polestar 2 is an award-winning EV. This is Polestar’s second design and its first to offer variations. It's the Polestar 2 that helped position the company as a premium EV manufacturer.

Indeed, Polestar 2 brings Volvo’s avant-garde Scandinavian design and leading in-car technology to this sleek electric vehicle.

It includes the world’s first infotainment system powered by the Android Automotive operating system. This has Google built-in to its premium version in a driver-oriented, dynamic driving package.

Hertz Continues its Electrification Journey

Hertz Global Holdings operates the Hertz, Dollar and Thrifty vehicle rental brands. These have a global presence and can be found in North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand.

Hertz also operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets. Plus, it sells vehicles through Hertz Car Sales.

The company is committed to its shift to electrification. It wants to be a leader in the space, focusing on shared mobility via EVs while ensuring customers get the most from a digital-first experience.

A Polestar partnership is the latest in expanding its EV rental fleet. Hertz was involved in a media frenzy late last year as news spread of a 100,000 Tesla (NASDAQ: TSLA) order to the rental company. But Tesla’s CEO Elon Musk tweeted that a contract had not been signed.

Hertz wants to provide a choice of EVs to its business and leisure customers, along with rideshare drivers. 

Stephen Scherr, Hertz CEO, said:

We are excited to partner with Polestar and look forward to introducing their premium EV products into our retail and rideshare fleets… By working with EV industry leaders like Polestar, we can help accelerate the adoption of electrification while providing renters, corporate customers and rideshare partners a premium EV product, exceptional experience and lower carbon footprint.

Is Polestar a Good Company?

Founded by Volvo Cars and Geely Holding in 2017, Polestar is becoming a popular choice of electric vehicle. Polestar vehicles are more frequently being seen on the streets of Europe, North America, China and Asia Pacific.

Being an offshoot of Volvo greatly benefits its reputation and provides it with a significant head start compared to many alternatives in the space.

Polestar sports some specific technological and engineering collaborations with Volvo Cars. Meanwhile, its association with China’s Geely gives it high hopes for rapid scale.

Polestar cars are currently manufactured in two facilities in China, with additional future manufacturing planned in the USA. 

Polestar’s production volumes almost tripled in 2021, and it anticipates more than doubling volumes again this year. The company expects volumes to reach 290,000 vehicles per year by the end of 2025.

By 2023, Polestar wants its vehicles to be available in 30 markets.

Polestar CEO Thomas Ingenlath said:

Polestar is committed to accelerating the move to electric mobility with a fascinating and innovative product portfolio. We are delighted that Hertz has chosen Polestar as a strategic partner on their road to electrification. The partnership with a global pioneer like Hertz will bring the amazing experience of driving an electric car to a wider audience, satisfying a broad variety of our mutual customers’ short- and longer-term mobility requirements. For many of them it may be the first time they have driven an EV, and it will be a Polestar.

When will Polestar IPO?

The Polestar IPO date has not yet been confirmed but is expected to take place in Q2, 2022. 

It will debut on the NASDAQ stock exchange after merging with GGPI stock.

Is GGPI Stock a Buy?

Over the past year, Gores Guggenheim Inc (GGPI) has traded between $9.61 and $16.41. Today it sits at $12.51 in early market trading, so it still has a 31% climb to return to its previous high.

There is additional risk in investing in SPAC mergers. Most companies that have gone public via SPAC in the past couple of years end up losing share price value after the merger takes place. This is something to keep in mind.

The reason is that a SPAC investment comes with a lucrative opportunity for early private investors, so they often seek to take profits shortly after the new company publicly lists.

Polestar is a reputable company with a solid backer in Volvo and strength in notable partnerships like Hertz. The company has also racked up sales which gives it a clear advantage over many of its publicly listed EV peers.

Nevertheless, due to the nature of SPACs and the broader economic environment, there’s a high chance the GGPI (soon-to-be PSNY) stock will remain volatile before and after the merger.

If you enjoyed reading this GGPI stock overview, why not read more of our investment analysis or IPO coverage

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Topics:
Electric Vehicles
Industries:
Information Technology
Industrials
Companies:
Gores Guggenheim

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay currently holds a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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