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On Monday, Cantor Fitzgerald maintained a Neutral rating on Polestar Automotive Holding UK Plc (NASDAQ:PSNY) following the company’s recent announcement regarding its product lineup in the United States. Polestar, an automotive manufacturer, has been significantly affected by tariffs, leading to the removal of its Polestar 2 model from the U.S. market. This vehicle was previously manufactured in China. The company’s financial health score is rated as "WEAK" according to InvestingPro data, with significant debt burden and rapid cash burn among key concerns.
The decision to stop selling the Polestar 2 in the U.S. was disclosed on April 4, 2025, and resulted in a notable drop in Polestar’s share price, which fell approximately 10.4% on the same day. The stock has declined 44% over the past six months, with current trading at $0.92. According to InvestingPro analysis, the stock appears undervalued, though investors should note that 16 additional ProTips are available for deeper insight into the company’s prospects.
To counterbalance the tariff impact, Polestar can utilize its production facility in South Carolina. This facility, which is also shared with Volvo (OTC:VLVLY), has an annual production capacity of 150,000 vehicles. Of these, Polestar is expected to produce around 50,000 vehicles, which may provide some relief from the tariff-related pressures.
Despite these mitigating factors, the market’s immediate reaction to the news was unfavorable, reflecting investor concerns about the implications of the tariff issues on Polestar’s business. The reiteration of the Neutral rating by Cantor Fitzgerald underscores the challenges that Polestar faces in the current economic environment.
The analyst from Cantor Fitzgerald, Andres Sheppard, highlighted the tariff impact as a significant factor in the assessment of Polestar’s stock. The company’s strategic decisions and production capabilities continue to be closely monitored by investors as they assess the potential outcomes of these recent developments.
In other recent news, Polestar announced a significant financial development by securing a 12-month term facility of up to $450 million and renewing its €480 million Green Trade Finance Facility to support its working capital and growth plans. This comes amid a strategic shift as outlined by Polestar’s management, focusing on a pivot from luxury to premium electric vehicles and emphasizing cash conservation. Despite these efforts, Polestar reported a net loss of $323 million for the third quarter of 2024, with revenue declining by 10% year-over-year to $551 million, influenced by lower sales volumes and competitive pressures.
Analysts from Bernstein have adjusted their outlook on Polestar, increasing the stock’s price target to $0.40 while maintaining a Market Perform rating, reflecting the company’s updated strategy. However, the company’s path to profitability appears to be longer than initially anticipated, with an updated business strategy aiming for retail sales volume growth of 30-35% from 2025 to 2027 and targeting positive adjusted EBITDA by 2025. Polestar’s recent guidance for the full year 2024 suggests a mid-teens percentage decline in revenue and a negative gross margin, similar to 2023, due to challenging market conditions.
In related developments, Bernstein analysts have highlighted Ford Motor Company (NYSE:F)’s potential exposure to new U.S. tariffs, noting that Ford’s U.S.-assembled vehicles contain only 30% domestic content. This could lead to a significant impact on gross profits compared to its peers if tariffs are applied. Meanwhile, Polestar is also facing potential risks due to its significant Mexican and Chinese content, which may be affected by proposed tariffs. These recent developments underscore the complex challenges facing automotive manufacturers in navigating trade policies and market dynamics.
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