The Polestar stock price has crashed hard in the past few months. It collapsed from $16.40 in 2021 into a penny stock trading at $1.09. This retreat has brought its market cap from almost $27 billion to $2.3 billion.
Lotus Technology stock was trading at $3.47, down from the all-time high of $18, bringing its market cap to over $9 billion to the current $2 billion. So, are the Polestar and Lotus Technology stocks good investments?
Polestar’s business is struggling
Polestar is a top electric vehicle company, partially owned by Volvo, which Geely then owns. It is a Chinese firm whose goal is to manufacture high-end electric vehicles and sell them mostly in China. Europe, and in the United States.
The company’s business has experienced major headwinds in the past few months, as its growth slowed and customers experienced substantial depreciation. Its annual revenue dropped from $2.4 billion in 2022 to $2.37 billion in 2023, and its trailing twelve-month revenue was about $2 billion.
The most recent financial results showed that Polestar sold 12,548 vehicles in the fourth quarter, down 8% from Q3. Lower deliveries and prices caused lower revenue, which fell 10% to $551 million.
Polestar’s nine-months revenue dropped to $1.45 billion in the first nine months, down from $1.86 billion a year earlier. Its gross margin also moved from 1% to minus 2.4%, meaning that it continued to lose money on each car it sold.
Polestar’s management has hinted that it hopes to turn a profit this year. However, the main challenge is that its balance sheet is a bit stretched now that Volvo has said that it will not extend more funding.
Polestar has, therefore, turned to the debt market. It recently negotiated with its $950 million club loan lenders who agreed to restructure the payments. It also secured $800 million in 12-month facilities and is negotiating a $400 million facility. Most of these raised funds will be used to pay its debt.
Polestar’s business will likely continue facing headwinds as demand growth for its vehicles weakens. Competition in the industry is rising and its vehicles are depreciating at a faster pace. A Polestar vehicle loses about 25% in the first year and 50% in three years.
Polestar stock price analysis
The daily chart shows that the Polestar share price has retreated in the past few months. It has moved from the September high of $1.94 to $1 today. It formed a falling channel part of a bullish pennant pattern. The stock is also consolidating at the 50-day moving average.
Therefore, while risky, there is a possibility that the Polestar stock price will rebound, and possibly retest the key resistance point at $1.94, its highest swing on September 18.
Lotus Technology is doing well but losses are a concern
Lotus Technology, part of the Geely brand, is an EV company that focuses on the luxury market, with its SUV starting from $229,900. The most recent delivery figures showed that the company delivered 12,065 vehicles in 2024, a 70% increase from last year. It aims to increase its deliveries by 28% this year.
The recent results showed that Lotus Technology’s revenues rose by 105% to $653 million, while its net loss jumped to $667 million. The challenge, however, is whether there is substantial demand for super luxury EVs because of their depreciation. Concerns also exist about its substantial losses and balance sheet.
The daily chart shows that the Lotus Technology stock price has been in a strong downtrend in the past few months. It has formed a descending channel shown in green and moved slightly below the 50-day moving average.
Technicals suggest that the Lotus stock may bounce back this year as investors buy the dip. If this happens, the next point to watch will be at $5.
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