Polestar assigned no value by analysts cutting Volvo’s price target

BLOOMBERG

Sweden’s Volvo Car AB saw its target price cut by more than a third to a new street low after analysts at SEB AB scrubbed the value they assign to the company’s 48% stake in struggling EV maker Polestar.
Volvo Car’s new target price of 28 Swedish kronor per share follows “sizable estimate cuts” and “no longer attributing a value to Polestar,” SEB analysts said in a note to clients. The research team had previously given Polestar an 18 billion kronor ($1.72 billion) valuation.
“Finding a valuation floor is made difficult by expected continued cash burn on what is, in this industry, a somewhat weaker balance sheet,” the analysts said. The cut comes in the wake of Polestar releasing disappointing preliminary figures and a lower gross margin forecast last week.
The EV maker attributed the miss to a challenging market that resulted in fewer deliveries in the fourth quarter.
In a major management reshuffle, Polestar also brought in a new board member, finance chief and head of sales from Volvo Car and China’s Zhejiang Geely Holding Group Co.
Polestar was previously a subsidiary of Sweden’s Volvo Car, which is itself owned by Geely.
Since its listing in the US, Polestar has been tapping its key backers Volvo Car and Geely for new funds as it aims to more than double production over the next two years. But the company continues to struggle to gain market share due to software delays and competition from Chinese manufacturers that are selling battery-powered models at lower prices.