Polestar’s Survival Strategy: A Reverse Stock Split Amid Mounting Challenges

The electric vehicle manufacturer Polestar finds itself in a precarious financial position. To maintain its listing on the Nasdaq exchange, the company is deploying a drastic measure: a 1-for-30 reverse stock split, set to take effect on December 9, 2025. This move consolidates every thirty existing shares into a single new one, aiming to artificially boost the share price by a factor of thirty. The immediate objective is clear—to avoid delisting by staying above the critical one-dollar threshold. However, this financial maneuver does little to address the underlying operational pressures the automaker faces.

Recent earnings reports present a mixed financial portrait. On a positive note, Polestar delivered a 56.5% surge in revenue during the first half of 2025, reaching $1.4 billion. Vehicle deliveries grew by more than 51%, and the company saw an improvement in its adjusted EBITDA margin.

These gains are overshadowed by a substantial impairment charge of $739.3 million booked in the second quarter. This write-down was primarily driven by increased production costs and intense pricing pressure affecting the Polestar 3 model. This starkly highlights the core challenge of achieving profitable growth within the capital-intensive EV sector. The equity's performance mirrors this conflict, having lost more than half its value since the start of the year and trading near its 52-week low.

Should investors sell immediately? Or is it worth buying Polestar Auto.adr/a?

Market Analysts Express Persistent Doubts

Financial experts remain deeply cautious despite the emergency corporate action. The average price target for the stock sits around $1.25, yet the range of forecasts—from a low of $0.78 to a high of $9—signals extreme market uncertainty. The prevailing analyst recommendation is "Hold" or even "Reduce." Their skepticism is rooted in several fundamental risks:

• An unpredictable cash burn rate that continues to deplete the company's reserves.
• The looming threat of new trade tariffs, which could significantly increase production expenses.
• A brutal price war within an increasingly crowded electric vehicle marketplace.

For niche players like Polestar, the competitive pressure from both established automotive giants and agile new entrants represents a formidable obstacle to long-term viability.

The Uphill Battle for Relevance

While the reverse split may buy the company critical time to comply with exchange rules, it does not constitute a solution to its broader business dilemmas. The strategy is a defensive play to preserve its listing status. The far more significant contest—securing a sustainable and competitive position in the global EV landscape—remains entirely unresolved. Polestar's journey ahead is defined by the need to demonstrate a credible path to profitability while navigating a perfect storm of financial and market headwinds.