- GGPI stock fell in line with the broad market sell-off on Wednesday.
- Gores Guggenheim had been strong as Hertz announced a partnership to buy 65,000 Polestar EVs.
- GGPI is to take Polestar public in a SPAC deal.
GGPI stock fell in line with most other names on Wednesday as the market turned south on the back of an increasingly hawkish stance from the Federal Reserve. With inflation out of control, one does really wonder why it took the market so long to cop on to this, but there you go. What we saw on Wednesday then was a general sell-off with most sectors closing lower.
GGPI stock would be classed in the higher-risk equity space as it is a start-up and also the deal with Polestar has not yet been completed. So if equities were selling off, the higher-risk ones were getting hit even harder. As a result, we witness even sharper falls in the likes of start-up EV stocks, growth names, and meme stocks. GGPI lost just under 4% and closed at $11.74.
Read more research on the Electric Vehicle sector
GGPI stock news: Polestar-Hertz deal a positive fundamental
Wednesday did not see any news flow specific to GGPI stock. GGPI shares and made a strong move earlier this week as Hertz (HTZ) and Polestar announced a partnership over 5 years which will see Hertz take up to 65,000 Polestar EVs. A nice order certainly and further embellishes HTZ in the EV space as last year it placed an order for 100,000 vehicles from Tesla. GGPI stock rallied sharply but has now pretty much given back all of those gains.
Polestar is due to go public in the first half of this year via a SPAC deal with GGPI. Polestar is at the minute looking like Volvo's electric division. I know that is not quite the case but the companies are strongly linked. Volvo and Volvo's owner Geely each have a nearly 50% stake in Polestar. The cars look like Volvo's with sleek Scandinavian designs and Polestar is to piggyback on Volvo's manufacturing and service network. Volvo's US plant in South Carolina will be used by Polestar for its entry into the US market and it will use Geely manufacturing plants in China.
This means huge capital investment is not needed. Polestar will have its own sales but this is not expensive to build. Manufacturing is the capital draining set up and so Polestar has a huge advantage in this regard versus other start EV companies.
GGPI stock forecast: A waiting game above $10 support
GGPI stock market looks like a waiting game. SPAC has to keep $10 in cash to return to shareholders in the event the SPAC deal falls through. This is a nice bit of security to have, with limited downside, and unlimited upside. Newsflow is reasonably quiet in this name. The Hertz news was the most significant event since Polestar's Superbowl ad at the start of the year. Apart from that, it has been relatively quiet in the name. That is partly why the stock fails to hold any spikes. More clarity and news regarding the SPAC deal will likely see a bit more momentum and make the stock more sustainable.
In terms of the chart, it was disappointing that the break above $12 was not held. $10 is the obvious support.
GGPI stock chart, daily
*The author is long GGPI
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