Over the last year, SPACs and EV (electric vehicle) companies have been popular in the investing world. Polestar, the premium EV manufacturer owned by China's Zhejiang Geely and Volvo Car AB, is in talks to go public through a reverse merger with the Gores Guggenheim (GGPI) SPAC. Is GGPI stock a good buy amid the Polestar merger news?
GGPI stock gained as much as 5.1 percent on Jul. 9, and was higher in premarket trading on Jul. 12. There isn't any official news yet from GGPI on its merger with Polestar.
Who's the sponsor of the GGPI SPAC?
In its Mar. 2021 IPO, GGPI raised $750 million by offering 75 million shares for $10 each. The SPAC is sponsored by affiliates of The Gores Group and Guggenheim Partners. GGPI is led by Chairman Alec Gores and CEO Mark Stone. Gores is the founder and CEO of The Gores Group, while Stone is a senior managing director. In Dec. 2020, The Gores Group also took Luminar Technologies public.
The GGPI-Polestar merger news
On Jul. 8, Bloomberg reported that GGPI is in discussions to bring Polestar public. The deal may value the combined company at approximately $25 billion, according to the people familiar with the matter. Polestar had been considering options for going public as soon as this year, according to a Bloomberg report in Mar. 2021.
The GGPI and Polestar merger isn’t confirmed
No merger agreement has been reached, and it’s possible that the conditions could change or that discussions fall apart. Polestar and GGPI declined to comment on the matter.
Polestar is a good acquisition target
Polestar is a Swedish automobile manufacturer. The company’s first model, the Polestar 1, is a plug-in hybrid, while the Polestar 2, an all-electric vehicle, went into production in Mar. 2021. The Polestar 3 SUV might be produced in the U.S. using Volvo's existing manufacturing facilities, and the car is set to launch in the U.S. in 2022. In Mar. 2021, Polestar entered into a partnership with charging infrastructure company ChargePoint to provide seamless EV charging.
Many technology companies have praised Polestar. TechCrunch claims that Polestar has developed a better car than Tesla.
Polestar versus Lucid Motors
In 2020, Polestar's total revenue grew 600 percent year-over-year to $645 million. GGPI is expected to value Polestar at approximately $25 billion, suggesting the company's 2020 price-to-sales multiple is 38x.
Lucid Motors is set to go public by the end of Jul. 2021. CCIV assigned Lucid a pro forma equity value of $24 billion. However, based on CCIV stock's current market price of $26.02, the market cap is close to $41.6 billion. In 2021, the company expects to deliver 577 vehicles and report total revenue of $97 million. Its stock trades at a 2021 price-to-sales multiple of 429x.