The Special Purpose Acquisition Company, Gores Guggenheim (NASDAQ:GGPI) is rallying this morning as they are almost set to take Polestar public this Friday. The merger has been ongoing since 2021, and marks a new chapter for the Swedish based Electric Vehicle company. The proposed reverse merger was put to the shareholders on Wednesday and approved, so what now?
Polestar To Go Public on the Nasdaq under PSNY
Here’s a short summary on how SPAC mergers work. The way Special Purpose Acquisition’s work is that the SPAC institution, who are already currently trading publicly, will find a target company that is not listed and merge with the target. This is called a reverse merger, and the funds raised by the SPAC will be passed onto the target firm, with some of the SPAC management joining the targets firms board to add expertise. The proposed merger will provide $1.05 Billion in proceeds to fund the Swedish businesses expansion model. The size of the Polestar deal is almost double that of the highly anticipated CCIV and Lucid Motors merger.
Now GGPI who are currently trading on the NASDAQ, will merge with Polestar on Friday and the stock will change its ticker to PSNY. From there on, the stock will trade as Polestar and investors who held GGPI will now own PSNY stock. Further, investors can purchase Polestar stock directly from the NASDAQ from Friday.
How is Polestar currently tracking as an EV competitor?
Polestar is considered a highly established EV brand. Polestar is jointly owned by Volvo and Chinese automaker Geely Automobile. The company even has high profile investors such as Leonardo DiCaprio contributing to the companies Owner’s Equity.
In 2021, the company netted $1.3 Billion in Revenues with a volume of 29,000 Polestar Electric vehicles. By 2025, the company has forecasted a revenue inflow of $17.6 Billion with 290,000 vehicles in production. In the company presentation, Polestar reaffirmed their position a pure play in the EV sector. While Nio and Xpeng are more regional threats in Asia, the company is focused on competing with the biggest EV player, Tesla. Here’s the production overview from Polestar, in particular the models the company looks to debut over the coming years.
Looking between the lines in SPAC mergers
However, these types of acquisitions are more detailed when it comes to current shareholdings. These SPAC organisations raise capital through PIPE investors, usually with a price per share of $10. These PIPE investors have a lock up period, usually barring them for selling the stock before the merger. However, usually 3-6 months after the lock up expires and PIPE investors can now offload the stock.
This is always something worth considering as a retail investors. If you look through the performance of SPAC transitioned companies, post lock up the stock tends to struggle (this is not always the case). Once the majority of PIPE investors have sold positions, there is less downwards pressure from shareholder selling.
Summary: Polestar Closes in on NASDAQ Debut
In conclusion, Polestar is all set to debut on the NASDAQ this Friday following the companies successful shareholder vote. The cash inflows from the merger will assist Polestar in their endeavours in competing in one of the hottest markets right now.
The difference between this EV merger and many others we have seen recently, is that Polestar is already generating significant revenues. With revenues the company can be effectively valued, giving investors better insight into the value of the stock. Overall, the merger marks an exciting new chapter for the Swedish EV manufacturer and its shareholders.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.