Polestar (NASDAQ:PSNY), an electric vehicle (EV) company backed by China’s Geely (OTCMKTS:GELYY), but based in Sweden, got a non-compliance notice from Nasdaq for failing to maintain a price of $1 per share.
Polestar has until Jan. 2 to get its price up and maintain its listing.
PSNY stock was at 94 cents per share in pre-market trading this morning, with a market capitalization of $1.9 billion. The stock’s price fell below $1 in late May and hasn’t recovered, falling to a low of 70 cents in late June.
EV Winter
Many EV stocks have had a rough time in 2024, as demand on the high end of the market has dried up. Only BYD (OTCMKTS:BYDDY), which sells cars for under $25,000 and controls its own supply chain, has been immune. Tesla (NASDAQ:TSLA) is up 6% on hopes for its artificial intelligence (AI) and robotics technology.
Polestar went public in June 2022 after merging with a special purpose acquisition company (SPAC) called Gores Guggenheim. On its first day of trading, it traded at around $13, 16% higher than the SPAC price of $10.
Polestar plans to build its Polestar 3 in Ridgeville, South Carolina. But the Biden administration’s new 25% tariff on Chinese batteries has forced a re-evaluation.
During the first half of 2024 Polestar delivered 20,200 cars. But it had an operating loss of $231.7 million in the first quarter, on revenue of $345 million. It has since laid off 15% of its staff. The second quarter results are due on August 29.
Polestar was originally spun out from Volvo (OTCMKTS:VLVLY), the gas-powered car company Geely bought from Ford Motor (NYSE:F) in 2010. But Volvo reduced its stake to 18% in February through a 2-for-1 share split worth $920.67 million. Most of those shares wound up with Geely.
Bernstein analyst Daniel Roeska said in January Polestar is on a “road to nowhere.” He said the company should be folded back into Geely, which owns 88% of the stock and 93% of the voting rights. Polestar says it will burn through its $1.3 billion in cash by next year.
PSNY Stock: What Happens Next?
Roeska’s words are proving prescient. If Polestar is to survive, it will likely be as a Geely subsidiary.
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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in F stock.
