Polestar, the electric vehicle (EV) maker majority-owned by China’s Geely Holding, announced plans to conduct a reverse stock split as it seeks to maintain its Nasdaq listing despite mounting losses and ongoing market challenges.
The company reported a third-quarter net loss of $365 million, up from a $323 million loss in the same period last year. Revenue, however, rose 36% year-on-year, reflecting growing sales despite operational pressures.
Reverse Stock Split: Protecting Nasdaq Listing
Polestar’s shares have recently traded below $1, prompting a warning from Nasdaq that the EV company could face delisting for failing to meet the minimum bid price requirement.
A reverse stock split reduces the number of outstanding shares while increasing the per-share price, but does not change the overall value of investors’ holdings. This step is primarily aimed at ensuring compliance with Nasdaq rules.
CEO Michael Lohscheller stated:
“As market conditions remain challenging, we continue to take steps to make our organization and operations more efficient.”
Lohscheller previously attempted a similar strategy at Nikola (NKLAQ) during his tenure as CEO, although Nikola eventually went bankrupt.
Financial Performance and Challenges
While Polestar’s revenue growth demonstrates market traction, the company faces significant headwinds:
- Tariffs and costs – U.S. tariffs have increased production costs and impacted margins.
- Residual value guarantees in North America – These obligations, common in EV leases, require Polestar to cover resale value gaps, becoming costlier as used EV prices decline.
- Debt pressures – The company has had to negotiate amendments with lenders to comply with debt covenants.
Despite a revenue increase, these factors have contributed to Polestar’s widening losses and weighed on investor confidence.
Strategic Adjustments and Market Focus
To mitigate losses and stabilize operations, Polestar has undertaken several measures:
- Leadership changes – Replacing the CEO and restructuring the executive team.
- Cost-cutting initiatives – Streamlining operations and improving efficiency.
- Shift to dealer-focused model – Moving away from direct sales in weaker markets.
- Focus on Europe – Leveraging strong demand in European markets to offset sluggish U.S. sales, where hybrid and gasoline vehicles remain popular.
In September, Polestar unveiled the Polestar 5 GT, announcing it would skip launching in the U.S. and China, two of the most lucrative EV markets, as part of its strategic pivot.
Share Price History and Market Context
Polestar shares have fallen significantly from their $13 closing price on debut in June 2022, following a merger with a special purpose acquisition company (SPAC). Weak share performance, rising operational costs, and competitive pressures have made the reverse stock split a necessary measure to remain listed and attract investor confidence.
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