Why Polestar Automobile stock plummeted this week

Polestar Automotive (PSNY -7.15%) Stocks collapsed in the final week of trading. The company’s shares ended this week’s session down 37.1% from last Friday’s market close, according to data from S&P Global Market Intelligence.

Polestar confirmed May 23 that it is delaying the release of its first quarter earnings report due to ongoing accounting issues. In particular, companies specializing in electric vehicles (EV) have not yet announced their performance for the fourth quarter of last year.

Polestar’s further delays shock investors

Polestar, a Swedish-based electric vehicle company spun off from Volvo, went public through a merger with a special purpose acquisition company (SPAC) completed in 2022. The stock is down about 77% over the past year and is currently down 94% from its highs. The company now has a market capitalization of $1.65 billion, worth about a third of its expected sales this year.

When a company misses its earnings reports, it’s often a sign of major operational or accounting problems. Polestar actually delayed the release of its fourth quarter report twice, with results from the most recent delayed period arriving in late April. With results for the final quarter of last year not yet in and no clear indication of when reports for the final two quarters will arrive, investors have been selling off stocks this week.

What’s next for Polestar stock?

A delayed earnings report may be a sign that the company needs to revise its previous financial results. In most cases, this results in a downward revision. This means the business may not be as healthy as investors previously thought, and it also raises questions about whether future financial reports provided by management can be trusted and used to assess the stock’s prospects.

Polestar last announced its financial performance on November 8 last year, recording third-quarter sales that were significantly below market expectations. Although sales were still up about 41% year-over-year, revenue for the period was about $114 million short of the average analyst estimate.

The company ended the period with a cash position of $951 million, but posted an operating loss of $735 million in the quarter. Polestar continues to raise additional capital through $1 billion in new loans, but is burning through cash at a rapid pace. In addition to these difficulties, the stock is at risk of being delisted. Nasdaq I’m exchanging it because the EV specialist has not met financial reporting requirements and the stock is trading for less than $1.