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With nearly a billion dollars in financing, Polestar (NASDAQ:PSNY) shares continue to rally, gaining another 14% on Thursday, adding to Wednesday’s 22% gain.
The gains over the past two days reverse losses in Polestar (PSNY) from the past month and places share above both the 50- and 100-day moving averages for the first time since the end of January.
The company announced Wednesday that it had secured $950M in financing from a consortium of 12 banks, triggering a rally that launched shares to a one-month high. The development may have breathed new life into the Swedish EV-maker, but the company has faced significant headwinds over the past several months that could continue to weigh.
Besides slowing demand for electric vehicles, Volvo (OTCPK:VLVLY), (OTCPK:VOLVF) recently cut ties with the struggling EV company selling off its majority stake to shareholders, primarily Geely Sweden which owns a 40% stake in Polestar (PSNY) and 78.7% stake in Volvo (OTCPK:VLVLY), (OTCPK:VOLVF). This leaves Geely with the responsibility of funding for Polestar (PSNY).
Additionally, Polestar (PSNY) has been bleeding cash and hasn’t posted a profit since becoming a public company in 2022. The company operates with a razor-thin gross margin of just 1.1% compared to a 26% gross margin for Volvo (OTCPK:VLVLY), (OTCPK:VOLVF).
And earlier this month, Hertz (HTZ) reportedly halted plans to buy tens of thousands of cars from Polestar (PSNY), driving shares lower for a fifth straight day.
The news came just days after Polestar (PSNY) said it was cutting its global workforce by 15% to accommodate challenging market conditions and right-size the business for efficiency. The job cuts raised doubts that the company would be able to meet already diminished production targets. Polestar (PSNY) slashed its 2025 delivery estimates to 155K-165K from its initial target of 290K and plans to achieve cash flow break-even in the same year. And despite the $950M infusion, it still falls short of the $1.3B the company said it would need to breakeven.
Analysts are mixed on Polestar (PSNY) with Seeking Alpha authors rating it as a Sell, and Wall Street analysts giving Polestar (PSNY) a Neutral rating. Seeking Alpha's Quant Rating views Polestar (PSNY) as Hold.