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Why Polestar Stock Is Plummeting Today


What happened 

Shares of the Swedish electric vehicle (EV) maker Polestar Automotive Holding (PSNY -14.31%) were tumbling today after COVID-related protests arose in China over the weekend. The company manufactures its Polestar 2 vehicles in Luqiao, China, and investors are concerned that the automaker’s production will slow down as a result of the unrest. 

The EV stock was down by 11% as of 1:54 p.m. ET on Monday. 

So what 

China has maintained a very strict zero-COVID policy to fight outbreaks of the coronavirus, but citizens started new protests over the weekend to fight the restrictions. 

That’s caused some investors to worry that Polestar could experience more production slowdowns in the country. 

A white vehicle.

A Polestar vehicle. Image source: Polestar.

Polestar released its third-quarter results on Nov. 11 and management said at the time that the company’s suppliers and business partners have “experienced delays or disruptions from COVID-19,” and added that: “… the prolonged government mandated quarantines and lockdowns in eastern China … delayed production and delivery of critical components for the Polestar 2” in the third quarter.

The company estimated that it lost about eight weeks of production during the quarter. 

And with the new protests, investors are expecting that more time could be lost. 

Now what

Polestar’s stock isn’t alone in feeling the effects of unrest in China. Apple‘s shares fell today on a report that its iPhone production could be affected by protests as well. 

All of which means that investors in companies that rely heavily on China for production should expect more volatility as the Chinese government sticks to its strict COVID lockdowns and restrictions. 

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.



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