- Gores Guggenheim stock falls nearly 5% after strong gains on Monday.
- GGPI stock had rallied 11% on news of a partnership between Polestar and Hertz.
- GGPI is due to take Polestar public via the SPAC deal in the first half of 2022.
Gores Guggenheim (GGPI) failed to charge higher on Tuesday after the stock did just that on Monday. The catalyst on Monday was the announcement of a partnership between Hertz (HTZ) and Polestar. Hertz is to take 65,000 Polestar EVs over five years. This is similar to a deal last year between Hertz and Tesla (TSLA) when HTZ announced it was buying 100,000 Teslas. On that occasion, TSLA stock rallied 11% and added approximately $80 billion to its market cap. Hopes for something similar in GGPI were not to come to fruition just yet. As a holder of GGPI, I live in hope!
Read more on Electric Vehicle stocks
Gores Guggenheim is due to take Polestar public via the SPAC deal later this year. The exact date is not confirmed but it is due to be in the first half of 2022. Polestar is an electric vehicle maker that is an offshoot of Volvo. Polestar is backed by Volvo and Geely. Geely is Volvo's de-facto owner since 2010. Recently, Volvo bought out its joint venture holding in China from parent Geely as rumors of a potential Volvo IPO mount.
Volvo owns 49.5% of Polestar while Geely owns 50.5%.
GGPI stock news: Meme stock momentum fading
GGPI stock had spiked up to $13.30 when news of the Hertz deal was released, but those gains were short-lived with GGPI giving back 4.6% on Tuesday. Some of this can be put down to overall market weakness as the Nasdaq closed 2% lower, but momentum traders are stepping back from riskier assets currently as can be seen in the momentum in other meme stocks falling.
GGPI stock forecast: Needs SPAC deal clarity before rallying again
Breaking above the strong zone from $12 to $12.36 is key and ideally, GGPI stock would seek to remain above this zone to consolidate for a continued bullish trend move. However, the lack of newsflow is what sees the share price struggle. With that in mind, we feel more sideways trading is likely until more clarity is received about the proposed SPAC deal to take Polestar public. Clarity from Gores Guggenheim is needed on this front. From a personal perspective, any pullback toward $11 can be used to add to my long position. SPACs are required to hold $10 in cash in the event of a no-deal materializing. So this is essentially you're stop loss.
GGPI chart, daily
*The author is long GGPI.
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