Shares of Polestar Automotive (NASDAQ:PSNY) can be found on today’s list of biggest decliners. Unfortunately for investors of this beaten-down electric vehicle (EV) company, shares of PSNY stock hit an all-time low today. This came amid a key downgrade from an analyst at Barclays.
This downgrade, from equal weight to underweight, came amid what analyst Dan Levy believes is softening consumer demand for electric vehicles overall. A combination of competition from leaders like Tesla (NASDAQ:TSLA) and other major players should pressure margins, at least in the near term. Thus, with lower expected margins, it’s increasingly likely that Polestar will have difficulty hitting its production targets. It also may require a capital raise in the future.
Let’s dive into what to make of this call, and whether Polestar is a buy after hitting fresh lows.
Is PSNY Stock Worth Buying at These Rock-Bottom Levels?
The whole idea of buying low and selling high implies investors can step into positions when no one else wants to and sell to those who are greedy near the top of the cycle. It’s easier said than done. And while seemingly no one wants to invest in cash-burning early stage EV makers (and analysts don’t seem to want to give their blessing), there have to be certain contrarian investors salivating at such an opportunity.
Of course, it’s more likely than not that the market, and Wall Street analysts, are on point with their view that it could be tough sledding ahead for Polestar and its peers. Like other early stage EV makers, Polestar is burning through cash. Thus, for investors, valuing these companies is increasingly difficult. One needs to determine if there is a path to profitability, and if so, how long it will take before investors have a shot at seeing some capital redistributed in their direction.
Accordingly, this is a stock that appears to be getting riskier the lower it goes, making it one I don’t think cautious investors concerned with capital preservation should consider right now.
On the date of publication, Chris MacDonald did not have (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.
