Polestar A Plummets 23% on Reverse Split and Analyst Downgrades – What’s Next?

Summary
• Polestar A (PSNY) crashes 23.07% intraday to $14.09, hitting a 52-week low of $13.95
• Analysts downgrade to 'Sell' as the company faces Nasdaq delisting risks and a 1:30 reverse split
• Options volatility surges with 134.46% implied volatility on $14 puts

Today’s plunge in Polestar A reflects a perfect storm of regulatory pressure, analyst skepticism, and structural corporate actions. The stock’s 23% drop—its worst intraday performance since 2022—has triggered a frenzy in options markets and raised urgent questions about its near-term viability. With the reverse split looming and institutional investors trimming exposure, the path forward for PSNY remains perilous.

Reverse Split and Analyst Downgrades Trigger Sharp Selloff
Polestar A’s collapse stems from a confluence of catalysts. The company’s announced 1:30 reverse split, effective December 30, has spooked investors, compounding concerns over its ability to maintain Nasdaq listing compliance. Simultaneously, Zacks Research and Wall Street Zen downgraded the stock to 'Strong Sell' and 'Sell,' respectively, citing deteriorating fundamentals and a lack of near-term catalysts. Analysts highlighted Polestar’s 90% loss in market value over the past three years, alongside its recent $739 million impairment charge on U.S. operations. The stock’s plunge to a 52-week low of $13.95—matching its 2025 trough—underscores the market’s loss of confidence.

EV Sector Mixed as Tesla Gains Ground
While Polestar A’s collapse deepens its isolation, the broader EV sector shows mixed signals. Tesla (TSLA), the sector’s dominant player, edged up 0.32% intraday, outperforming PSNY’s carnage. However, Chinese EV rivals like BYD and NIO remain under pressure amid global pricing wars. Polestar’s struggles highlight its structural challenges: unlike Tesla’s scale or BYD’s cost advantages, Polestar’s niche positioning and reliance on parent Geely’s subsidies have left it vulnerable to margin compression and regulatory scrutiny.

Options Playbook: Puts for Short-Term Bearish Bets
• RSI: 99.01 (overbought bearish divergence)
• MACD: 1.36 (bullish signal ignored by price action)
• 200-day MA: $1.08 (far below current price, indicating structural weakness)
• Bollinger Bands: Price at $14.09, near lower band ($13.95), suggesting oversold conditions

Technical indicators paint a bearish picture for PSNY. The stock’s RSI at 99.01 signals extreme overbought conditions, while the MACD histogram’s 1.14 divergence highlights a breakdown in momentum. With the 200-day MA at $1.08 and Bollinger Bands compressing near the 52-week low, short-term volatility is likely to persist. The PSNY20251219P14 and PSNY20251219P15 puts stand out for bearish bets. The PSNY20251219P14 put (strike $14, expiration Dec 19) has 134.46% implied volatility, a delta of -0.4588 (moderate sensitivity), and a theta of -0.0296 (rapid time decay). Its 47.78% price change ratio suggests liquidity. The PSNY20251219P15 put (strike $15, same expiration) offers a 128.07% IV, delta of -0.5900 (high sensitivity), and a theta of -0.0156. Both contracts benefit from high gamma (0.1277 and 0.1314, respectively), amplifying gains if the stock gaps down. A 5% downside scenario (to $13.39) would yield a PSNY20251219P14 payoff of $0.61 per contract and a PSNY20251219P15 payoff of $1.61. Aggressive short-sellers should target these puts ahead of the reverse split, but watch for liquidity crunches as turnover remains low.

Backtest Polestar A Stock Performance
The backtest of PSNY's performance after a -23% intraday plunge from 2022 to now shows mixed results. The 3-Day win rate is 45.43%, the 10-Day win rate is 43.21%, and the 30-Day win rate is 40.98%. However, the overall returns over these periods are negative, with a -0.90% return over 3 days, a -2.08% return over 10 days, and a -4.67% return over 30 days. The maximum return during the backtest period was -0.25%, indicating that the stock has not fully recovered from the intraday plunge.

Act Now: Short-Term Bearish Play on Polestar Amid Delisting Risks
Polestar A’s freefall reflects a crisis of confidence, with its reverse split and delisting risks creating a self-fulfilling prophecy of selling. While technicals suggest a potential bounce near $13.95 (lower Bollinger Band), the stock’s structural weaknesses—negative PE ratio, high short interest, and analyst skepticism—make a sustained recovery unlikely. Investors should prioritize PSNY20251219P14 and PSNY20251219P15 puts for short-term bearish exposure, but monitor the December 29 reverse split for execution clarity. Meanwhile, Tesla’s 0.32% gain underscores the sector’s bifurcation: scale and innovation matter. For PSNY, the next 10 days will test its survival. Watch for a breakdown below $13.95 or a regulatory intervention—either could trigger a liquidity event. Act now: Short-term bearish bets are justified, but long-term investors should avoid this high-risk trade.