Gores Guggenheim Is a Buy, But Consider an Alternative in the Short Term
The merger between Polestar and Gores Guggenheim (NASDAQ:GGPI) is expected to happen in the first half of 2022. Since the Swedish electric vehicle (EV) manufacturer announced its merger with the special purpose acquisition company (SPAC) on Sept. 27, GGPI stock has gained about 14% or so.
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However, at one point in mid-November, GGPI stock was trading as high as $16.41. That's well above where it currently trades under the $11.50 level.
The volatility amongst EV manufacturers has been significant in the second half of 2021. Now, with volatility likely to continue into 2022, some possible alternatives exist as a short-term solution for risk-averse EV investors. Here's why you should consider them.
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Forego GGPI Stock Until After the Merger
At the end of November, I argued that GGPI stock was a better buy for aggressive investors than Rivian (NASDAQ:RIVN) in the long term. However, I also said that investors need not rush to buy the SPAC before the merger happens.
"[I]f a stock is destined to be a long-term winner (five to 10 years out), there is no rush to run out and buy it. Instead, get to know the company a little better. You might even get a better price in the process."
From the day the Polestar 1 was launched, I have been a fan of the brand's designs. And I'm not even a total car geek. The EV just looks nice. However, that's an entirely different subject than whether you should buy GGPI at today's prices.
I think this stock may continue to trade in the low teens until the de-SPAC merger happens in 2022. And I'm not the only one.
Around the same time as my article, fellow InvestorPlace contributor Chris Tyler argued that technical analysis of the stock suggested the beginning of December wasn't the time to buy either. Ultimately, Tyler felt that waiting could get you a better entry point.
He was right. In December, it's currently down almost 16%.
The Safer Alternatives
As you might be aware, post-merger, Polestar's existing shareholders will own 94% of the company. Polestar itself is a joint venture between Volvo (OTCMKTS:VLVLY) and Geely (OTCMKTS:GELYY). As a result, Geely owns 50.5% of Polestar's equity while Volvo owns 49.5%.
However, because Geely owns 78.4% of Volvo Cars stock — not to mention nearly 97% of its voting power — Polestar will ultimately be controlled by the Chinese car company and billionaire Li Shufu, the world's 52nd wealthiest person.