Polestar Earnings Miss: Stock Plummets Following Q3 Report

Polestar's stock took a 13.5% hit after a disappointing earnings report. The electric vehicle maker reported lower than expected sales and increased losses, raising concerns about its future prospects.

Date: 16-01-2025

AI Rating: 4

Polestar Automotive faced significant pressure with its stock price dropping by 13.5% following an earnings miss. The company reported revenue of $551 million, falling short of analysts’ expectations of $634 million. Additionally, the net loss reported was $323 million, translating to a loss of approximately $0.16 per share, slightly more than the anticipated loss of $0.15. This performance indicates serious issues within the company’s operations and market performance.

In terms of Revenue Growth, Polestar's Q3 results showed a decline in revenue by 10% from the previously year, and a steep revenue decline of 21% over the first three quarters of the fiscal year. The relatively smaller decline of revenue in Q3 compared to previous quarters does suggest a moderation in sales slowdown, which could be interpreted positively, though still remains concerning overall.

Regarding Net Income, the reported loss of $323 million raises alarms as it demonstrates substantial operational inefficiency. Notably, Polestar lost more than $25,740 for every EV it sold, highlighting unsustainable business practices at current sales volumes.

Moreover, the management has updated its guidance to indicate an expected decline in revenues for 2024 by mid-teens percentage, coupled with predictions of negative gross profit margins. This further suggests that Profit Margins are not on track to improve in the near future, and indeed may worsen.

Polestar's challenges stem from "higher discounts in a competitive market and a delay in sales ramp up of new carlines," as articulated by management. Analysts believe profitability will not materialize until 2031, positioning the company under a prolonged scrutiny and raising doubts about its long-term viability.

Overall, Polestar's performance has not instilled confidence among investors, as it appears more like a sell than a hold in the current market climate.

Stocks: PSNY