Polestar (GGPI Stock) is Undervalued Compared to Peers and Why a Price Target of $30 is Realistic

We start by providing a bit of background about Polestar as a company. I will then dive into the price forecast for GGPI stock, which is developed through a valuation relative to its peers. There is also the upcoming reverse merger for Polestar and GGPI. What is Polestar (GGPI Stock)? Here is a great summary of Polestar (source) and my comments for some of the key points. A Swedish-based, high-performance, global pure EV play. The only other global, pure EV play like Polestar is Tesla. ---Lucid, Rivian, Xpev, only sell in their home country (US or China), and Nio sells in China and recently started selling in Norway. Polestar is already delivering cars to consumers in 19 countries, 100 cities globally. They are rapidly expanding sales, pop-up stores and service locations around the world. 800+ services centers and 100+ pop-up stores operating globally to help and attract customers. Polestar met their goal of 29k car deliveries in 2021. They are already well on their way in scaling up production and increasing deliveries. Goal for 2022 is 65k deliveries, and goal for 2025 is 290k deliveries. 32% of GGPI stock is owned by institutions-which shows strong confidence in the company by those big investors. Institutional ownership is a good sign that the big guys are placing strong bets that GGPI will perform well. Polestar will be launching 3 new EVs in the next 3 years. Upcoming Polestar 5 launching in 2024 and its highly praised, unique design. It embodies the design/look of POLESTAR, all of its upcoming/future cars. Polestar 2 and 1 are based on Volvo's architecture. Polestar 1 was a limited run, Polestar 2 is still being sold around the world. Upcoming Polestar 3 (SUV) launching later this year will be "Built in the US for the US". This is an often-overlooked factor. Having cars built in the US and sold in the US is a great marketing tactic for Polestar. Americans will want to buy cars that are built in the US of A Polestar operates fully independently and is 49.5% owned by Volvo which just announced intent to commit further investment and to back Polestar's future growth, and Volvo is owned by Geely. Polestar is backed by both of these automotive giants, giving them an edge, like for good manufacturing, scaling production, and strong infrastructure to ensure fast growth. This is a great sign, essentially you have a proven auto manufacturer as a significant shareholder of Polestar. Volvo knows how to manufacture cars and they understand the mid-luxury space that Polestar is playing in. Volvo has partnered with NorthVolt (a large battery manufacturer) to build a new battery manufacturing factory for an R&D center and to help ensure steady battery supply and production for Polestar cars (and Volvo cars) for the future. (source) GGPI Stock Forecast 2025 Let’s take a quick look at GGPI’s valuation versus its peers, and do a quick comps analysis to determine a reasonable price target for GGPI GGPI Valuation vs Peers So, let's take a look at the valuations of the most popular EV start ups: $RIVN - $103b valuation - 42 cars delivered (mainly to employees) - Expects to spend over $1b this quarter to make $1m in revenue. $FSR - $5.9b valuation - It expects to deliver 700 vehicles by 2023 (another 2 years). $0 revenue $LCID - $72b valuation - It expects to deliver 577 cars in 2021 with only 13,000 reservations. $76m revenue $GGPI (Polestar) - $20b Valuation - Sold and DELIVERED over 10,000 cars in 2020 alone and expects to delivery 29,000 in 2020. $1.2b in revenue. A quick review of these valuations relative to actual vehicles delivered shows the GGPI is severely undervalued. GGPI Stock Price Target A quick look at comps based on number of vehicles delivered shows that a GGPI stock price target of $30 to $40 per share is not unreasonable. This is based on the market cap of its peers and deliveries of cars in the last year. If GGPI valuation is around $25 billion then it is a 3x multiple to be at LCID valuation and a 4x multiple to  be at Rivian’s valuation – this is how we get to a $30-$40 stock price target for GGPI/Polestar. There is no reason why Polestar/GGPI stock price in 2025 will be at least $30 / share. GGPI Reverse Merger with Polestar Polestar, announced on Jan. 11, 2022 that it had met its target production and sales of 29,000 cars in 2021. However, it has not yet gone public through a reverse merger with Gores Guggenheim (NASDAQ:GGPI). The company said it expects to close the deal in the first half 0f 2022. Meanwhile, GGPI stock trades as if it will become Polestar, and seems to be very cheap. The reason is that, based on the Sep. 2021 investor presentation from Polestar, the final company will have 2.125 billion shares outstanding. Therefore, at today’s price of $11.80 per share for GGPI, the pro forma market value for Polestar will be $25.5 billion. This could be before any extra performance or insider warrants that are likely to hit the market, as well. To be conservative, let us assume that GGPI stock is worth twice its present price once the reverse merger with Polestar goes through. Moreover, let us assume that it will take 18 months for the stock to reach that price. Here is how we can calculate its target price. At twice today’s price, GGPI stock/Polestar will be worth $24 per share. Assuming it takes 18 months for this to occur, the annualized return is 58.7% annually. That means its first-year price target is $19.05 per share.  (source) I think we will see a similar trend with GGPI as we did when Lucid went public and the lockup expiries

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Polestar (GGPI Stock) is Undervalued Compared to Peers and Why a Price Target of $30 is Realistic

bullish

We start by providing a bit of background about Polestar as a company. I will then dive into the price forecast for GGPI stock, which is developed through a valuation relative to its peers. There is also the upcoming reverse merger for Polestar and GGPI.


What is Polestar (GGPI Stock)?

Here is a great summary of Polestar (source) and my comments for some of the key points.

A Swedish-based, high-performance, global pure EV play. The only other global, pure EV play like Polestar is Tesla. ---Lucid, Rivian, Xpev, only sell in their home country (US or China), and Nio sells in China and recently started selling in Norway.

Polestar is already delivering cars to consumers in 19 countries, 100 cities globally. They are rapidly expanding sales, pop-up stores and service locations around the world. 800+ services centers and 100+ pop-up stores operating globally to help and attract customers.

Polestar met their goal of 29k car deliveries in 2021. They are already well on their way in scaling up production and increasing deliveries. Goal for 2022 is 65k deliveries, and goal for 2025 is 290k deliveries.

32% of GGPI stock is owned by institutions-which shows strong confidence in the company by those big investors.

Institutional ownership is a good sign that the big guys are placing strong bets that GGPI will perform well.

Polestar will be launching 3 new EVs in the next 3 years. Upcoming Polestar 5 launching in 2024 and its highly praised, unique design. It embodies the design/look of POLESTAR, all of its upcoming/future cars. Polestar 2 and 1 are based on Volvo's architecture. Polestar 1 was a limited run, Polestar 2 is still being sold around the world. Upcoming Polestar 3 (SUV) launching later this year will be "Built in the US for the US".

This is an often-overlooked factor. Having cars built in the US and sold in the US is a great marketing tactic for Polestar. Americans will want to buy cars that are built in the US of A

Polestar operates fully independently and is 49.5% owned by Volvo which just announced intent to commit further investment and to back Polestar's future growth, and Volvo is owned by Geely. Polestar is backed by both of these automotive giants, giving them an edge, like for good manufacturing, scaling production, and strong infrastructure to ensure fast growth.

This is a great sign, essentially you have a proven auto manufacturer as a significant shareholder of Polestar. Volvo knows how to manufacture cars and they understand the mid-luxury space that Polestar is playing in.

Volvo has partnered with NorthVolt (a large battery manufacturer) to build a new battery manufacturing factory for an R&D center and to help ensure steady battery supply and production for Polestar cars (and Volvo cars) for the future. (source)

GGPI Stock Forecast 2025

Let's take a quick look at GGPI's valuation versus its peers, and do a quick comps analysis to determine a reasonable price target for GGPI

GGPI Valuation vs Peers

So, let's take a look at the valuations of the most popular EV start ups:

$RIVN - $103b valuation - 42 cars delivered (mainly to employees) - Expects to spend over $1b this quarter to make $1m in revenue.

$FSR - $5.9b valuation - It expects to deliver 700 vehicles by 2023 (another 2 years). $0 revenue

$LCID - $72b valuation - It expects to deliver 577 cars in 2021 with only 13,000 reservations. $76m revenue

$GGPI (Polestar) - $20b Valuation - Sold and DELIVERED over 10,000 cars in 2020 alone and expects to delivery 29,000 in 2020. $1.2b in revenue.

A quick review of these valuations relative to actual vehicles delivered shows the GGPI is severely undervalued.

GGPI Stock Price Target

A quick look at comps based on number of vehicles delivered shows that a GGPI stock price target of $30 to $40 per share is not unreasonable. This is based on the market cap of its peers and deliveries of cars in the last year.

If GGPI valuation is around $25 billion then it is a 3x multiple to be at LCID valuation and a 4x multiple to be at Rivian's valuation - this is how we get to a $30-$40 stock price target for GGPI/Polestar.

There is no reason why Polestar/GGPI stock price in 2025 will be at least $30 / share.

GGPI Reverse Merger with Polestar

Polestar, announced on Jan. 11, 2022 that it had met its target production and sales of 29,000 cars in 2021. However, it has not yet gone public through a reverse merger with Gores Guggenheim (NASDAQ:GGPI). The company said it expects to close the deal in the first half 0f 2022. Meanwhile, GGPI stock trades as if it will become Polestar, and seems to be very cheap.

The reason is that, based on the Sep. 2021 investor presentation from Polestar, the final company will have 2.125 billion shares outstanding.

Therefore, at today's price of $11.80 per share for GGPI, the pro forma market value for Polestar will be $25.5 billion. This could be before any extra performance or insider warrants that are likely to hit the market, as well.

To be conservative, let us assume that GGPI stock is worth twice its present price once the reverse merger with Polestar goes through. Moreover, let us assume that it will take 18 months for the stock to reach that price.

Here is how we can calculate its target price. At twice today's price, GGPI stock/Polestar will be worth $24 per share. Assuming it takes 18 months for this to occur, the annualized return is 58.7% annually. That means its first-year price target is $19.05 per share. (source)

I think we will see a similar trend with GGPI as we did when Lucid went public and the lockup expiries

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