There are plenty of electric vehicle (EV) startups out there to choose from. So, why should you invest in Polestar Automotive (NASDAQ:PSNY)? The answer is that PSNY stock is likely to gain substantial value during the next couple of years due to Polestar’s improving financials and ambitious plan to sell tens of thousands of EVs.
Just to provide some background info, Swedish EV manufacturer Polestar Automotive was established in 2017. The company has already released its Polestar 2 vehicle model, and Polestar’s vehicles are currently on the roadways in Europe, North America and the Asia-Pacific region (including China).
Moreover, Polestar Automotive has financial backing from the likes of Volvo (OTCMKTS:VLVLY) and BNP Paribas Asset Management. Perhaps those investors envision steady growth for Polestar — and after learning some fast facts about the company, you might choose to take a long-term share position as well.
What’s Happening With PSNY Stock?
PSNY stock is down but certainly not out of the race. The Polestar share price cruised along at $10 or more in 2021 and half of 2022, before downshifting to the $5 area.
So, does this represent a compelling discount, or a car wreck in progress? As usual, the data tells the full story and in Polestar’s case, this story could have a very happy ending.
First of all, Polestar Automotive plans to launch not just one but two new EV models by 2025. Specifically, the company expects to release the Polestar 4 Premium Sport SUV this year, and the Polestar 5 Luxury Sport GT 4-Door in 2024. (The Polestar 6 is slated for a 2026 release, but that’s too far out in time to think about now.)
Polestar Rolls Out Some Stellar Stats
Of course, launching new vehicle models won’t be enough to keep Polestar Automotive up and running. Therefore, let’s look under the hood and see how Polestar’s doing from a financial perspective.
On the fiscal front, there’s definitely positive news to report. Polestar Automotive’s fourth-quarter 2022 revenue increased 67% year over year (YOY) to $985.2 million, while the company’s operating loss shrank 39% to $204.7 million.
Moreover, for all of 2022, Polestar’s revenue rose 84% YOY to $2.5 billion, and the company’s adjusted operating loss contracted 8% to $914 million. Thus, Polestar Automotive is successfully selling its EVs and making progress toward closing its profitability gap.
Finally, we can’t ignore Polestar’s revised 2023 vehicle delivery guidance. The company had previously issued a 50,000-vehicle delivery target for the year. However, Polestar Automotive currently “anticipates global volumes to increase by nearly 60% to approximately 80,000 cars.” This ramp-up, according to the company, will mainly be “driven by Polestar 2 sales.”
So, Here’s My PSNY Stock Price Prediction for 2025
Polestar Automotive is growing in all the right ways. At the same time, it seems like financial traders don’t fully appreciate the company’s progress. Hence, there’s a ripe opportunity here.
Polestar’s 2023 delivery target of 80,000 vehicles is ambitious, so I’m comfortable targeting a high share price. I expect PSNY stock to easily double from here and reach $10 or more by 2025. Just don’t go overboard with your investment, as EV startups are risky, even when they’re as high-confidence as Polestar Automotive.
On the date of publication, David Moadel 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.