Porsche IPO Review

Porsche History

Dear passengers, buckle up because it’s going to be a long story with aggressive trading, hidden takeover and the Nazi government before we get to the Porsche IPO release.

Ferdinand Porsche, the father of Porsche, was first involved in building the first Volkswagen car in 1937 by the Nazi government. But only after the war, in 1948, he built up his own company with just 200 employees. Since then Porsche and Volkswagen have been close to each other with Volkswagen being a parent company now. The two companies have collaborated on other cars, including the 914 and, from 2002, the Cayenne and Touareg twins. Volkswagen Group is also the parent company of various other luxury car brands, including Audi, Bentley, Bugatti, and Lamborghini.

There was one time when Porsche almost took over Volkswagen. Let’s dig into the merger history before we discuss Porsche going public and reasons for it. 

In 2005 it was discovered that Porsche had been buying shares of Volkswagen and building up a stake, which was around 20% already. All of this time, the Porsche executives were denying the desire to acquire Volkswagen, claiming Porsche was merely trying “to protect one of the world’s biggest carmakers from corporate-raiding locusts.” Three years later they doubled their share in VW to 42.6 percent, and the intentions became obvious.  

At one point, thanks to its own share and option buying spree, Porsche was — on paper, at least — making more money playing the stock market than making cars.
Thanks to the global financial crisis, banks began calling in the loans used to fund the wild takeover bid. So Porsche was in need of cash, and quickly. The solution they found was to sell some shares to the Emir of Qatar. But it was prevented by the powerful German leaders. Volkswagen Group CEO Ferdinand Piech, German chancellor Angela Merkel, and the premier of Lower Saxony convinced the Emir to invest in Volkswagen instead.

In August 2009, Porsche SE and Volkswagen AG reached an agreement that the car manufacturing operations of the two companies would merge in 2011, to form an "Integrated Automotive Group". The management of Volkswagen AG agreed to 50.7% of Volkswagen being controlled by Porsche in return for Volkswagen management taking Porsche management positions (in order for Volkswagen management to remain in control), and for Volkswagen acquiring ownership of Porsche. It’s confusing but it’s a fact: Porsche is both owned by and an owner of Volkswagen Group and vice versa.

There’s never been a question like ‘When is Porsche going public?’ until last year, when Volkswagen announced a transition to electric cars and all related technologies. Now we could potentially see a Porsche stock IPO at the end of 2022.

Speaking of the Porsche IPO date and price… 

Porsche’s Public Listing Key Data and IPO Date

IPO Date: September 29
Ticket: PAH3
Exchange: Frankfurt Stock Exchange
Share price: $80
Valuation at IPO: $72 billion
CEO: Oliver Blume
Category: Automotive Stocks
Method: TBA

The details of the IPO are very vague. We are yet to know whether it is going public via a traditional IPO  or via a  Special Purpose Acquisition Company (SPAC), preferred by many companies in the past few years. The Porsche stock IPO date has also remained private. But on February 23 Volkswagen and the Porsche-Piech families confirmed they “are currently in advanced discussions regarding a potential IPO of [the Porsche brand].”

The decision about the Porsche IPO 2022 “depends on the approval of both parties’ boards”. The timing of the Porsche stock IPO will have a direct impact on the success of the whole IPO process. For example, this spring would be a very bad time to go public because of the Russia-Ukraine conflict, rising commodity prices and general market volatility in expectation of a rise in interest rates.

As for the Porsche IPO price, it will depend on the number of shares and valuation and the demand of course. Up to 25% of Porsche could be placed on the market, split evenly between ordinary and preferred shares. There was a report at the end of last year estimating the value of the luxury automaker to be between $71 billion to $142 billion. Such high valuation is due to brand recognition.

In the next section we will discuss the purpose behind the Porsche IPO and think about what Volkswagen will do with all the money.

So What About Investing Now?

Our only source of information about the Porsche IPO is the two company boards, so we don’t expect that it will happen fast. Therefore, we have plenty of time to analyze the potential of the upcoming IPO.

The reason for such a move could be Volkswagen’s inability to sponsor its own initiatives. Since the announcement of the whole electric vehicle direction, the company now needs vast funds to invest in R&D including self-driving technology. But because of a difficult corporate structure there are only two ways Volkswagen can raise funds: by issuing bonds or by investing its cash flow. 

Taking Porsche for an IPO is a great alternative to raise funds. The auto manufacturer has been growing in terms of volume and sales for a long time due to its remarkable quality, prestige and brand recognition. While Porsche’s 301,900 sales only make up 3.5 per cent of the Volkswagen Group’s 8.6 million sales in 2021, the profit margin from cars is so high that it constitutes 11% of the group sales.

Porsche also cares about the ecological trend and unveiled plans to produce a fully electric version of the Macan by the end of the year.

With that being said, the Porsche car itself is a good investment because luxurious cars with the current inflation are typically sold at the same price they were bought for. But of course buying stocks is cheaper and can bring profits much faster, so we are really looking forward to the Porsche IPO.

FAQ

Is Porsche a public company? Is Porsche publicly traded?

Porsche itself is not a publicly traded company yet. However, it’s a part of Volkswagen Group, a public company whose shares you can buy on European stock exchanges. Now the boards of two auto manufacturers are discussing details of the upcoming IPO and according to their statements Porsche might go public later in 2022. 

How much is Porsche worth?

The current valuation of the luxury automaker ranges between $71 billion to $142 billion. The final valuation will be done during the IPO and then we’ll have to look at the market cap, which depends on the stock price.

Where are Porsche’s headquarters?

The company has headquarters in Germany (obviously, in the motherland) and the US. As for Germany, the headquarters are in Stuttgart, but surprisingly the main production is in another city, Leipzig. In the States you can visit Porsche headquarters in Atlanta, Georgia and the $100 million Porsche Experience Center (PEC) there.