Why Polestar’s Outdated Electric Vehicle Stock Is Up 21% Today

Polestar Automotive (PSNY 13.76%) the stock rallied today and is up 17% as of 12:20 a.m. ET after posting gains of 21.1% in early trading today. The Swedish electric vehicle (EV) maker reported a sharp sequential jump in its second-quarter deliveries, a day after CEO Thomas Ingenlath abruptly resigned. The two updates were enough to spark a buying frenzy in EV stock that has lost more than 70% of its value in just one year.

Polestar gets new CEO amid falling sales

Polestar deliveries rose 82% to 13,150 cars in Q2 compared to the first quarter. However, that headline number only reveals half the story.

Polestar’s revenue fell 26 percent year-on-year to $918 million for two reasons: its deliveries he fell 17% year over year, even as higher discounts to boost sales amid growing competition hurt the electric vehicle maker’s top line and margins. Polestar reported a negative gross margin of 3.2% in Q2 compared to a gross margin of 1.7% in the year-ago quarter.

On the positive side, Polestar reduced its inventory by nearly 30% in Q2 versus Q4 2023 and narrowed its operating loss by 6% to about $466 million.

Should you buy Polestar shares now?

Polestar expects a “stronger” second half of 2024, driven by its two new cars — it recently began deliveries of the Polestar 4 coupe SUVs in Europe and expects to begin deliveries of the Polestar 3 SUV in the following weeks. The Polestar 3 is also the company’s first car to be produced in the US, reflecting its efforts to expand its manufacturing footprint beyond China. The electric vehicle maker plans to start production of the Polestar 4 in South Korea in 2025.

Polestar also announced a leadership change and appointed Michael Lohscheller, who previously headed Opel, VinFast Autoand Nicholasas its new CEO effective October 1. Investors likely expect Polestar’s fortunes to turn around under its new management, but it might be worth waiting before following the herd and buying the languid, volatile stock.