Polestar Automotive Holding UK PLC – Strategic Move Amid Volatile Earnings

Polestar Automotive Holding UK PLC (Nasdaq: PSNY), a Coventry‑based electric‑vehicle manufacturer, announced a significant change to its American Depositary Share (ADS) structure. Effective before the close of 2025, the company will shift the ADS ratio from one ADS per ordinary share to one ADS per thirty ordinary shares. This move aligns the company with the reverse‑split strategy already under consideration to safeguard its Nasdaq listing after the widening net loss reported for the third quarter of 2025.

ADS Ratio Shift

The announced adjustment will consolidate the trading unit of Polestar’s ADSs, reducing the total number of shares outstanding in the US market. By tightening the share count, the company aims to:

  1. Improve liquidity in the U.S. exchange, making the shares more attractive to institutional investors who often prefer larger trade sizes.
  2. Increase price stability, mitigating the impact of frequent large sell‑off waves that have plagued the stock since the Q3 earnings announcement.
  3. Support the reverse‑split plan that the board is evaluating to avoid potential delisting from Nasdaq, which would trigger a 15% reduction in share price if executed.

Financial Context

Polestar’s third‑quarter 2025 results revealed a net loss of USD 365 million, a 13% increase over the prior year’s USD 323 million loss. Revenue for the first nine months of 2025 rose 49%, driven by higher volumes and a strong model lineup, but the company still reported a loss per share of USD 0.72. Despite these challenges, Polestar managed to generate USD 123 million in carbon‑credit sales, a notable revenue stream that helped offset some material and fixed‑cost pressures.

The reverse‑split proposal, coupled with the new ADS ratio, is intended to:

  • Avoid Nasdaq delisting by meeting the 10‑share minimum requirement for listed companies.
  • Signal management’s commitment to restoring shareholder value through cost discipline and operational efficiency.
  • Provide a clearer price signal to investors, as the consolidated shares will likely trade at a higher price per unit, improving market perception.

Market Reaction

The announcement coincided with a broader market focus on electric‑vehicle stocks, as highlighted by TipRanks’ “Morning News Wrap‑Up.” Polestar’s share price fell over 9% to USD 0.72 in early trading, reflecting investor apprehension over the widened loss and the impending structural changes. However, the company’s strong revenue growth and carbon‑credit performance suggest that the underlying business remains resilient.

Outlook

Polestar’s leadership is poised to navigate this transition by:

  • Accelerating cost‑reduction initiatives in materials and fixed expenses.
  • Expanding its high‑margin premium models to improve gross margins.
  • Leveraging its carbon‑credit portfolio as an additional revenue stream until profitability is restored.

The ADS ratio change and potential reverse‑split are strategic tools designed to preserve Nasdaq listing status while preparing the company for a more efficient capital structure. Investors will closely monitor the effectiveness of these measures as Polestar continues to refine its financial performance in the competitive EV landscape.