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Special purpose acquisition companies, or SPACs, have cooled off their 2021 highs. However, the electric vehicle (EV) maker Gores Guggenheim (NASDAQ:GGPI) stock may be the rough diamond. Shares of the company climbed as high as $15 late last year, but quickly fell back into the $10 range. It has been trading at this level ever since.
However, investor optimism for the stock is on the rise as GGPI nears its upcoming SPAC merger with the VOLVOelectric vehicle manufacturer supported The North Star. The merger will give GGPI stock a further upside, making it a great buy at current price levels.
Polestar’s strong performance offers plenty of growth prospects for Gores Guggenheim. In 2021, the luxury electric vehicle maker hit its annual sales target of 29,000 vehicles, resulting in impressive annual growth of more than 185%. Polestar hopes to maintain this upward trajectory and expand its presence in the electric vehicle space. By 2022, the company plans to have 150 outlets in 30 international markets. By 2025, annual vehicle sales are expected to reach 290,000.
In addition to its ambitious growth goals, Polestar also has several exciting projects underway. The company recently announced its agreement with Hertz (NASDAQ: HTZ) which will purchase 65,000 Polestar vehicles over the next five years. At a retail value of $49,000 per car, this will secure the company $3.2 billion in revenue. The company has also signed an agreement with Business to expand its presence in the car rental market.
Gores Guggenheim is a name that often gets overlooked in the electric vehicle space, but merging with a high-growth name like Polestar will put the company in the spotlight. As far as its stock price goes, GGPI is what many investors would consider a bargain. Shares of the company are trading at a reduced valuation relative to other electric vehicle stocks due to macroeconomic headwinds in the space. A weak stock price coupled with a hot SPAC merger on the horizon makes GGPI stock a strong play in my books.
As of the date of publication, Divya Premkumar had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.