Polestar A Plummets 24.33%: A Perfect Storm of Reverse Split, Analyst Downgrades, and Market Panic?

Summary
• Polestar Automotive (PSNY) slumps to a 52-week low of $13.73, erasing $4.56 from its value in under 4 hours.
• Analysts slash ratings to 'Strong Sell' as the stock trades at 76% of its 50-day moving average.
• A 1-for-30 reverse split looms on Dec. 30, triggering liquidity fears and a 25.72% intraday selloff.

Today’s collapse in Polestar A marks one of the most dramatic intraday declines in the EV sector, driven by a confluence of corporate actions, analyst skepticism, and deteriorating investor sentiment. With the stock trading at just 37% of its 52-week high, the market is pricing in existential risks for the Swedish EV maker as it battles delisting threats and operational uncertainty.

Reverse Split and Analyst Downgrades Trigger Investor Exodus
The 24.33% intraday plunge in PSNY is a direct consequence of three compounding factors: (1) the announced 1-for-30 reverse split to avoid Nasdaq delisting, which has triggered panic over liquidity and trading mechanics; (2) a cascade of analyst downgrades, including Zacks’ 'Strong Sell' and Weiss Ratings’ 'Sell (e+)'; and (3) deteriorating fundamentals, with the stock hitting its 52-week low as short sellers capitalize on the volatility. The reverse split, effective Dec. 30, will reduce the float by 96.67%, creating immediate friction for traders and amplifying price swings. Meanwhile, the 93.33% price change ratio on the PSNY20251219P14 put option reflects extreme bearish positioning.

Auto Manufacturers Sector Volatile as Polestar’s Collapse Sparks Broader Jitters
While Polestar’s -25.72% decline dwarfs sector peers, the Auto Manufacturers sector remains under pressure. Tesla (TSLA) bucked the trend with a 0.22% gain, but broader EV stocks like Rivian (RIVN) and Lucid (LCID) traded lower. The sector’s beta of 1.37 highlights its sensitivity to macroeconomic shifts, with Polestar’s delisting risk and reverse split amplifying sector-wide uncertainty. Institutional investors, however, have increased stakes in PSNY by 43.2% in Q3, suggesting some contrarian positioning.

Options Playbook: Capitalizing on Volatility with PSNY20251219P14 and PSNY20260417C14
• RSI: 99.01 (overbought bearish divergence)
• MACD: 1.36 (bullish signal vs. -0.22 signal line)
• 200D MA: $1.08 (PSNY at $13.84, 12x above)
• Bollinger Bands: 13.84 at 99% of upper band (overbought)

Top Options Contracts:
• PSNY20251219P14 (Put):
- Strike: $14, Expiry: Dec 19
- IV: 168.90% (extreme bearishness)
- Delta: -0.4855 (moderate sensitivity)
- Theta: -0.0408 (rapid time decay)
- Gamma: 0.104977 (high sensitivity to price swings)
- Turnover: 3,617 (liquid)
- Payoff (5% downside): $0.69/share (max profit if PSNY drops to $13.15)
- Why it stands out: High gamma and IV make this put ideal for short-term volatility plays.

• PSNY20260417C14 (Call):
- Strike: $14, Expiry: Apr 17
- IV: 126.55% (moderate bullish potential)
- Delta: 0.6390 (high sensitivity)
- Theta: -0.01638 (slow decay)
- Gamma: 0.036638 (moderate sensitivity)
- Turnover: 62,250 (high liquidity)
- Payoff (5% downside): $0.00 (out-of-the-money)
- Why it stands out: Long-dated call offers leverage if PSNY stabilizes post-reverse split.

Action: Aggressive bears should prioritize PSNY20251219P14 for short-term gains, while long-term bulls may hold PSNY20260417C14 as a speculative bet on post-split recovery.

Backtest Polestar A Stock Performance
The backtest of PSNY's performance after a -24% intraday plunge from 2022 to now shows mixed results. The 3-Day win rate is 45.21%, the 10-Day win rate is 42.32%, and the 30-Day win rate is 42.32%. However, the overall returns over these periods are negative, with a -0.58% return over 3 days, a -1.19% return over 10 days, and a -0.74% return over 30 days. The maximum return during the backtest was only 0.10%, which occurred on the 30th day, suggesting that the stock struggled to recover from the significant intraday plunge.

Act Now: Polestar’s Freefall Presents High-Risk, High-Reward Opportunities
Polestar’s 24.33% intraday collapse is a cautionary tale of corporate brinkmanship and market panic. While the reverse split and analyst downgrades justify short-term bearishness, the stock’s 36% retail sales growth and institutional buying hint at potential stabilization. Investors must weigh the risks of delisting against the allure of leveraged options like PSNY20251219P14. Meanwhile, Tesla’s 0.22% gain underscores the sector’s divergent trajectories. Watch for the Dec 30 reverse split execution and institutional buying patterns—these could signal a turning point in PSNY’s survival story.