EV Manufacturers Raising Cash And Their Investors' Response -- October 11, 2023

Polestar:

• wants to raise money;
• stock is falling.
• link here.

From the linked article: 

A potential capital raise from Swedish electric-vehicle maker Polestar Automotive has its American depositary receipts sliding. That says more about Polestar investors than about the company.

Polestar (ticker: PSNY) showed its intention to raise $1 billion. That isn’t a shock. Still, the hint of new capital is pushing down shares sharply.

Tuesday evening, Polestar filed a “shelf” registration with the Securities and Exchange Commission. There are no immediate plans to sell shares or raise debt. A shelf registration gives the company the option to sell securities by registering them ahead of time. A company has securities “on the shelf” ready to sell when the time is right. It isn’t a great name.

The filing isn’t unusual. The stock reaction shows how skittish investors have become over EV start-ups’ need to raise additional money.

Rivian stock dropped about 23% on Oct. 5 after announcing plans to sell $1.5 billion in convertible notes. Everyone knows or should know, that Rivian will need more capital to build its business. Wall Street doesn’t project positive cash flow for most of this decade. Still, investors and Wall Street reacted harshly with reasons given ranging from the timing was poor to the raise was a surprise.