Charged: Analysts say sell Tesla and Lordstown, buy Fisker

Polestar has announced a deal to go public through a merger with Gores Guggenheim
Welcome to The Fly’s latest edition of “Charged,” where we look back at some recent analysts’ notes, news and activity in the electric vehicle and clean energy space.

POLESTAR NEARS DEAL TO GO PUBLIC: Polestar Performance AB (PSNY) and its affiliates and Gores Guggenheim (GGPI) announced that they have entered into a definitive business combination agreement. Upon closing of the proposed business combination, the combined company will be held by a new public company that will be named Polestar Automotive Holding UK Limited, which is expected to be listed on Nasdaq under the ticker symbol “PSNY.” The transaction implies an enterprise value of approximately $20B for the combined company, representing approximately 3.0x 2023E revenue and 1.5x 2024E revenue.

Over this weekend, The Wall Street Journal’s Cara Lombardo reported, citing people familiar with the matter, that Polestar was nearing a deal to go public through such a merger with the special-purpose acquisition company. Polestar, which is owned by Chinese car maker Zhejiang Geely, focuses on high-performance electric cars, positioning itself as a rival to Tesla (TSLA) and Lucid (LCID). Zhejiang Geely is controlled by its billionaire chairman and founder Li Shufu. It owns Geely Automobile (GELYF), Volvo Car Group and several other electric-vehicle brands, Lombardo noted.

SELL TESLA, BUY FISKER: Tudor Pickering Holt analysts Matt Portillo, Oliver Huang, Jeoffrey Lambujon and Jake Roberts initiated coverage of Tesla last week with a Sell rating as they believe the stock “looks fundamentally overvalued” given that they would need to expect 8M automotive units delivered in 2030 with high adoption rates of a level 4+ FSD system to justify the current share price, which the analysts call “a tough ask.” In a separate research note, they also started coverage of electric vehicle hopeful Fisker (FSR) with a Buy rating, saying the share price presents an interesting risk-reward.

SELL LORDSTOWN: Goldman Sachs analyst Mark Delaney downgraded Lordstown Motors (RIDE) to Sell from Neutral with an unchanged price target of $5, representing 34% downside from current share levels. The price target reflects the “competitive albeit growing” market for electric vehicles as well as the operational challenges that Lordstown is facing, including ramping production while facing supply chain and cash flow constraints, Delaney told investors in a research note. The analyst pointed out that Ford (F) is planning to bring out a battery electric vehicle F-150 in 2022 starting at $40,000 for fleets, compared to the Endurance pickup which Lordstown plans to price in the low $50,000 range. In addition, the current supply chain issues that the auto industry broadly is experiencing could complicate Lordstown’s production ramp over the next year, Delaney added. He also acknowledged that the competitive landscape and the company’s operational challenges remain concerns for him.
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