PSNY stock double bottom at $8.60 holds, can risk appetite return re-charge Polestar shares?

PSNY stock gave up some ground on Friday after the equity market zig-zagged for most of the week in anticipation of the next move by the Fed. The macro-environment remains the dominant force in equity markets right now and we are facing into a period of considerable confusion which is also affecting high-growth stocks like Polestar.

Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

US CPI number from last week made the market assume that 100 basis points rate hike was next up for the Fed as inflation was much too high. The Bank of Canada appeared to confirm the central bank bias when it did its own 100 basis pont hike. However, we soon got commentary from both Waller and Bullard that they saw 75 basis points as the more appropriate measure. Given both Bullard and Waller are noted Fed hawks who generally would favor higher rates, the fed funds futures totally repriced and now it appears we are set for 75 basis points in a repeat of the dose from June.

All this indecision in money markets had followed through to equity markets, which have been in a choppy sideways range as investors struggle to come to grips on where to next for valuations and the economy. 

PSNY stock to benefit from risk-on appetite coming back?

EV stocks like Polestar are high-risk, high-growth assets. The best barometer of risk we have is the performance of Bitcoin and over the weekend this has sprung to life and is currently up 7%. That indicated that retail traders may be returning to markets and risk appetites are growing after some harrowing times recently, which should benefit EV automaker stocks. 

ARK Innovation ETF (ARKK), the ETF tracking high-growth stocks – and one we have alluded to in our weekly preview notes, has also bottomed out and is showing signs of life. 

ARKK daily

Where has Polestar come from?

Volvo is the parent company of Polestar. The Swedish automaker created Polestar first as its racing team before being rebranded into its current focus. The EV automaker company was formed as a joint-venture between Volvo and Geely Holdings. Geely is a Chinese conglomerate.

Polestar is focused solely on the EV sector. Despite the electric vehicle focus, Polestar's first model – the Polestar 1 – was a hybrid motor vehicle. Since then, the company has launched the all-electric Polestar 2 sedan and is due to launch the Polestar 3 this fall. That will be an SUV model which is seen as the cash cow. SUVs are generally the most profitable cars, with the highest margins in the automobile sector.

Polestar 3

Thomas Ingenlath, Polestar's CEO, recently said that "Polestar 3 will stand out amongst other SUV offerings and boost our growth trajectory. It also represents the expansion of our manufacturing footprint into the United States as we become even more global. It is an important next step towards our goal of selling 290,000 cars in 2025 – ten times more than we sold in 2021.”

GGPI merge one of the few SPAC deals in 2022

Gores Guggenheim SPAC was the method taken to take PSNY stock public. Special Purpose Acquisition Company (SPAC) deals are few and far between in 2022, as cheap money has dissipated from the markets. The GGPI-PSNY merge represents one of the last ones to get across the line. The Gores Guggenheim Group (GGPI) brought Polestar to the market, previously trading under the ticker GGPI before the deal went through and the ticker changed to PSNY. GGPI investors approved the deal in June and PSNY stock began trading on June 25. 

PSNY stock news and forecast

PSNY reported sales numbers last week and they continue the positive growth trend. Polestar delivered 21,200 vehicles in the first half of the year which represents an increase of over 100% on the same period last year. Most notably, Polestar also reaffirmed guidance to deliver 50,000 in 2022. 

PSNY stock formed a near-perfect double bottom and now the bounce has retraced back to $10. To be bluntly bullish about it the target of a double top is the size of the peak. So in this case that peak is $5 give or take, $13.36-$8.61, so $4.70. The target is set from the top of the peak so adding to $13.36 gives a PSNY share price target of $18.06. 

PSNY stock, daily