Electric vehicles (EVs) are becoming more popular than ever before. With gas prices remaining high and the environment under attack, many people have begun looking for ways to reduce their carbon footprint without sacrificing performance or convenience. With many electric-vehicle startups in the market, it’s no surprise that special purpose acquisition companies (SPAC) are popular among investors. Gores Guggenheim (NASDAQ:GGPI) is one stock that you need to keep an eye on if you want to take advantage of such opportunities.
A close up of a Polestar vehicle in front of a company sign.
Source: Jeppe Gustafsson / Shutterstock.com
The automotive industry is changing quickly, with many companies moving toward electric cars. This has led to an increase in investments and projects related to EVs or their infrastructure requirements like batteries, for example.
Last year was a strong one for Polestar. The Swedish EV manufacturer delivered over 29,000 cars and met its annual sales target. The company’s sales were more than double in the last year with a 185% growth rate. Furthermore, they expanded their retail footprint to now operate in 100 locations globally.
The company expanded its operations to 19 markets from 10. They also identified Europe as an important territory for its expansion plans, along with the Asia Pacific region. The car manufacturer currently plans to expand to at least 30 global markets by year-end 2023.
They also plan to launch three new cars over the next three years. The first of these will be a premium SUV called the Polestar 3 and it is expected out this year. It will utilize technology from companies like Luminar (NASDAQ:LAZR) for its autonomous driving features, which are sure to make road trips more enjoyable without having to worry about human accidents.
Stocks Plunge When Electric Vehicles Meet SPACs
The EV phenomenon is disrupting the automotive industry. This new technology is gaining popularity in recent years, especially with the advancement of battery technology. EV stocks are soaring, and the future for Polestar seems to be promising. However, there is skepticism. And the sentiment is justified.
SPACs are a type of publicly-traded company that are created to acquire other companies. SPACs offer companies the opportunity to raise capital from investors without having to go through the lengthy process of an initial public offering (IPO). In addition, they offer liquidity for shareholders, which is another benefit that traditional private companies do not offer their investors. But stock prices for SPACs typically fall post-merger, which is not a good sign.
Naturally, investors do not want to be stuck with a lemon. Therefore, they want to purchase a stock with legs to run even after the dust settles on the reverse merger. Polestar appears to have all the ingredients of a successful post-merger run. It is a fast-growing company and its production is predicted to grow by 290,000 units in 2025 while its revenue will reach $17.8 billion.
GGPI stock is undervalued since Polestar produces EVs in bulk, whilst many other startups are still working on getting their production off the ground. The idea has been in the works for a while. It was being developed by Volvo (OTCMKTS:VLVLY) and Geely (OTCMKTS:GELYY), which are one of China’s most successful carmakers.
Therefore, GGPI looks like a better bet than most in the current market.
Polestar Plans for Expansion
If you are a long-term investor and don’t own shares of EV maker GGPI yet, it is a key name to buy. And if you own the company already, don’t worry as their recent poor performance is only temporary. As long as they don’t make any major mistakes, they should still make their shareholders a lot of money.
Polestar expanded the number of countries it could do business in during 2021. Polestar is also opening a lot of stores, having added 40 stores in 2021. As mentioned, this follows a general trend of increasing demand for its products.
The company will soon release a new SUV named Polestar 3. The car comes with driverless technology and will be manufactured in America. The company has some exciting things lined up for the late 2020s, as well. Initially, they will be launching the Polestar 4 in 2023. Then in 2024, Polestar 5 will make its debut. It will be a game-changing four-door sedan that builds on the 2020 Polestar Precept prototype.
All of these positive developments are the reason GGPI stock is attracting so much attention. When you combine this with the catalysts unique to the SPAC cycle, you have the opportunity to make a handsome gain from investing in this one.
GGPI Stock: A Great SPAC Play
SPACs have a lifespan of around two years and there are a number of risks to take into account. Investors who buy in early may not know about the types of investments the SPAC will make post-purchase, for example.
Blank-check companies are speculative investments that don’t have a specific purpose or business plan. They may be companies in development stages with no clear sense of business, or they might have an indication that they are merging or acquiring another company. Investors are wary about investing in a company without understanding what they do and how profitable they are.
However, that issue does not affect GGPI stock. The SPAC is merging with an excellent EV manufacturer that is doing very well. And there are several catalysts on the horizon that will continue to drive its growth. Particularly before it goes public, this stock is an enticing opportunity. And even after the inevitable post-reverse-merger dip, it will be an excellent pick for investors looking for exposure to the EV space.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. You can check out his analysis on InvestorPlace and TipRanks.
