Since 2020, many electric vehicle (EV) companies have gone public via the special-purpose acquisition company (SPAC) route. An upcoming EV SPAC deal is the tie-up between Gores Guggenheim (NASDAQ:GGPI) and EV company Polestar. Compared to other EV SPAC stocks, like Lucid Group (NASDAQ:LCID), for example, excitement over GGPI stock has been relatively muted.

Yet I wouldn’t take this lack of high excitement to mean Polestar is some sort of “also-ran” contender. It may not be another Tesla (NASDAQ:TSLA) in the making, but in terms of moving out of the pre-revenue stage, it has made far more progress than Lucid.

Already generating billions in revenue, it now has its sights set on the U.S. market. Success stateside could go a long way in growing its valuation. With this in mind, you may want to consider buying, ahead of the deal closing, set for next month.

GGPI Stock at a Glance

Debuting in May 2021, and announcing its selected merger partner in September 2021, Gores Guggenheim didn’t wait long to make a deal. It did, however, get into the game a bit late. It became an EV stock at the tail end of the 2020/2021 EV boom.

As a result, unlike LCID stock, or even some other EV SPAC plays like Fisker (NYSE:FSR), GGPI stock never made a true “to the moon” type move. After the announcement, it briefly spiked to over $16 per share. For the most part, though, it has traded sideways in the low-teens per share.

Now, with the latest pullback in speculative growth stocks, Gores Guggenheim has moved even lower. It trades for just over its original $10 per share SPAC price. Yet despite its mixed performance so far, the stock could really take off in the years ahead. Why? Two reasons.

First, based on its success so far, it appears to have a much stronger chance of living up to expectations. Second, based on its current price, investors can buy it at a favorable valuation. These two factors could enable shares to lift off in price if its scaling efforts succeed.

High Payoff Potential If Polestar Delivers

You can say Polestar is a newcomer, yet calling it an “early stage” company may be a misnomer. Already established in its home base of Europe, it generated an estimated $1.4 billion in sales last year.

As InvestorPlace’s Shrey Dua reported May 19, during the first quarter of 2022, it sold 13,600 vehicles, more than double the amount sold during the prior year’s quarter. Despite supply chain headwinds, it still expects to sell a total of 50,000 vehicles worldwide.

Based on its strong growth to date, Polestar has a good chance of continuing to level up on this success. Through both the ramp up of its presence in the U.S. auto market, plus the rollout of new SUV and luxury sport models to accompany its current fleet (the luxury Polestar 1, and the mass affluent Polestar 2), the company intends to hit 290,000 annual vehicle sales and $17.6 billion in annual revenue by 2025.

Best of all, you get this potential at a reasonable valuation, based on the current price of GGPI stock. Per the SPAC deal terms (2.125 billion shares outstanding post-merger), the company has an implied valuation of around $21.8 billion.

The Verdict

Earning a “B” rating in my Portfolio Grader, Gores Guggenheim offers high upside potential. If it can continue to meet/beat expectations, the company, which post-merger takes on the Polestar name, and the PSNY stock ticker, will likely be worth many times what it trades for today.

Relative to other EV plays, the risk/return proposition is highly favorable. For some investors, this may make it worthy of a speculative position. It’s unclear whether the stock pops or drops when it has its “deSPACing” (completes its SPAC merger).

Many SPAC stocks surged post-merger during 2020 and 2021, but it has been less common in 2022 due to changing market conditions. Even so, as it’s best to approach it as a long-term position, if you’re confident it will deliver, now may be the time to buy GGPI stock.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.