By Marie Mannes and Akash Sriram
STOCKHOLM (Reuters) -Luxury EV maker Polestar (NASDAQ:PSNY) on Thursday reported a second-quarter gross profit margin that exceeded analyst expectations and said it had secured more funds, sending shares up by more than 20%
The share rise reversed falls the previous session when the Swedish company surprised the market with news it was replacing its CEO following months of setbacks, including reduced demand, new tariffs, and the delay of new car launches.
Like rivals, Polestar needs cash as it grows its business with a view to becoming profitable and breaking even on cashflow in 2025.
In February, Polestar secured a $950 million loan from a bank syndicate, and on Thursday it announced a further $300 million loan from one of the banks, taking it to its target of achieving $1.3 billion in external funding.
The share price on Thursday reached a session high of $1.15, up more than 21%. It is still down more than 50% since the start of the year.
Cantor Fitzgerald analyst Andres Sheppard told Reuters the capital injection was major progress and that Polestar's gross margin of a negative 0.7% in the three-months to June, from positive 0.1% a year earlier had far exceeded analysts' expectations for a negative 6-7%.
"The business is nowhere near being fully funded, but it's encouraging that they are moving to be," he said.
On a call with analysts that the departing CEO did not attend, finance chief Per Ansgar said Polestar would welcome an equity injection and that the company was working on further reducing costs.
"We are looking to really reduce the base cost of all the car lines ... there are quite a lot of opportunities," he said and reiterated that the company aims to reach double digit gross margin by end of the year.
Long-serving CEO Thomas Ingenlath was replaced with Michael Lohscheller, a former boss of Opel on Wednesday when the share price fell by as much as 18.6%.
Lohscheller takes over as the company attempts to further ramp up its business and overcome the difficulties faced by EV startups of slower-than-expected growth in demand as high borrowing costs force consumers to choose less expensive gasoline-electric hybrid vehicles.
Sheppard said Lohscheller had the benefit of extensive automotive experience, "particularly around scaling businesses, which is certainly something that Polestar needs".
Polestar's need for finance became acute in February when co-founder, Volvo (OTC:VLVLY) Cars, said it would stop further funding.
Majority shareholder and also co-founder, China's Geely, has however said it intends to continue to support the group.
Polestar has two new models out this year, the SUVs 3 and 4, which it started delivering to customers earlier in the year. Currently, most of its car sales are its original Polestar 2.