Assessing Valuation as Shares Continue Recent Slide
Polestar Automotive Holding UK (NasdaqGM:PSNY) shares fell 3% in the past day, continuing a tough trend for the electric vehicle maker. The stock is down 10% in the last month. This reflects ongoing concerns about profitability and competition.
See our latest analysis for Polestar Automotive Holding UK.
Zoomed out, Polestar’s trailing 12-month share price return lagged the broader automotive sector, recording a decline of -19.6% over the last year and a significant total shareholder return of 30.9%. While some recent rises in 7-day share prices have brought some momentum, the overall trend remains subdued as investors evaluate growth prospects in the face of persistent losses and stiff competition.
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With shares still well below analysts’ price targets and the company reporting double-digit revenue growth, investors face an important decision. Is Polestar undervalued at these levels, or is the market already factoring in future growth?
At $0.88 per share, Polestar’s shares are trading below $1.00, the fair value of the most followed narrative. This gap is quite striking, considering the company’s increasing revenue but ongoing losses.
Persistent cash burn and lack of profitability increases reliance on external financing, risks diluting shareholders and limits future investment. Competitive pressures, pricing challenges and global supply risks threaten market share, margins and steady earnings growth.
Wondering what led to such an ambitious valuation? The narrative is built on numbers you wouldn’t expect: assumptions of a future recovery in margins, bold revenue growth and share growth of the kind rarely seen in the automotive world. Click to see the forecasts that analysts believe could justify a double-digit rise.
Result: $1.00 Fair Value (UNDERVALUED)
Read the full narrative and understand what’s behind the predictions.
However, persistently high cash burn and intensifying competition could derail the bullish trend if margins do not improve or external financing runs out.
Learn about the key risks in this Polestar Automotive Holding UK narrative.
While analyst estimates suggest Polestar shares are undervalued, a quick look at how the market values revenue tells a different story. The stock trades at 0.8 times sales; This is considered a good value compared to industry peers’ 2.3x, but still double its fair rate of 0.4x. This raises the possibility that downside risk will persist if the market loses patience with growth despite optimism.
