Barclays downgrades Polestar to underweight as demand weakens

  • Investing.com
  • Stock Market News
Barclays downgrades Polestar to underweight as demand weakens
Credit: © Reuters.

Barclays downgraded Polestar Automotive (NASDAQ: PSNY ) to an Underweight rating (From Equal Weight) and cut the 12-month price target on the stock to $3.00 (From $5.00) following demand and capital concerns.

PSNY reported disappointing 2Q results. Although the bottom-line EPS fell slightly short of consensus expectations (-14 cents versus -13 cents), PSNY maintained its 2023 volume and gross margin percentage guidance.

“The largest incremental development since our launch of coverage has been a deterioration of EV demand,” Barclays analysts wrote.

They acknowledge PSNY's reliance on contract manufacturing as a strategic move to sidestep direct price competition by eliminating overhead cost worries, however, the uncertain demand landscape raises concerns about PSNY's eventual production levels.

Despite PSNY's stated potential to achieve volumes in the 300K range, the analysts anticipate a need for tangible results with their upcoming model launches. Additionally, given PSNY's affiliation with the wider Geely (OTC: GELYY ) conglomerate (with 90% of its equity owned by Volvo (OTC: VLVLY ) and Geely), the company faces an additional challenge in terms of market positioning, with the aim of avoiding direct competition with Volvo).

Earlier this year, PSNY revised down its 2023 volume projection, scaling it back to a range of 60,000 to 70,000 units from the previously set 80,000. What's even more worrisome is the growing trend of selling vehicles to the fleet sector.

While some of these sales may involve company cars in Europe, which is a relatively more robust channel, Barclays suspects a substantial portion has been directed towards the car rental segment, where economic conditions are generally less favorable.

Shares of PSNY are down 2.3% in premarket trading on Thursday.

 

Add Chart to Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
Please try another search