Why Polestar Automotive Stock Crashed This Week

Polestar Automotive (NASDAQ: PSNY) stock got crushed over the last week of trading. The company’s share price ended this week’s session down 37.1% from last Friday’s market close, according to data from S&P Global Market Intelligence.

Polestar confirmed on May 23 that it was postponing the release of its first-quarter earnings report due to ongoing accounting issues. Notably, the electric vehicle (EV) specialist still has not released its fourth-quarter report for last year.

Polestar’s shocks investors with more delays

Polestar, a Sweden-based EV specialist that was spun off from Volvo, went public through a merger with a special purpose acquisition company (SPAC) that was completed in 2022. The stock has lost roughly 77% of its value over the last year and now trades down 94% from its high. The company now has a market capitalization of $1.65 billion and is valued at roughly a third of this year’s expected sales.

When a company misses an earnings report, it’s often a sign of major operational or accounting issues. Polestar has actually delayed the release of its Q4 report two times, with the most recent postponement for that period’s results arriving at the end of April. With the results for last year’s final quarter still missing and no clear indication when reporting for its last two quarters might arrive, investors dumped the stock this week.

What comes next for Polestar stock?

Delayed earnings reports can be a sign that a company needs to issue revisions for previous financial results. In most cases, these wind up being downward revisions. This means that the business may not be as healthy as investors had previously thought, and it also raises questions about whether future financial reports from management can be trusted and used to evaluate the stock’s outlook.

Polestar last reported financial results on Nov. 8 of last year, posting third-quarter sales that fell far short of the market’s expectations. While revenue still grew roughly 41% year over year, sales for the period fell approximately $114 million short of the average analyst estimate.

While the company closed out the period with a cash position of $951 million, it also posted an operating loss of $735 million in the quarter. Polestar went on to secure additional capital through a new $1 billion loan, but it’s burning cash at a rapid clip. In addition to these challenges, the stock is in danger of being delisted from the Nasdaq exchange because the EV specialist has not met financial reporting requirements and because its stock is trading below $1.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Polestar Automotive Stock Crashed This Week was originally published by The Motley Fool

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