Porsche Drives A Stock Shift

Image source: TLpixs - Shutterstock

What's going on?

Porsche made its hotly anticipated trading debut on Thursday.

What does this mean?

As motorists everywhere know, a Porsche can turn heads like nothing else a principle that also seems to hold true for shares. With stocks in a never-ending slump, and initial public offerings (IPOs) in Europe raising paltry sums that recall the dark days of 09,it looks like a bad time for new stock market listings. But not if youre Porsche. When Volkswagen listed a 12.5% stake in the sports car company on Thursday, investors didnt hold back: demand was so strong that shares hit the top of the initial pricing range, helping the company raise over $9 billion and valuing Porsche at around $73 billion. That marks the single biggest IPO in Europe in a decade good news for Volkswagen, which plans to re-invest the funds as part of its lofty electric vehicle push.

Why should I care?

For markets: Not the prince of pop.
Porsches shares rose by 3% when trading started bucking the trend of Germanys DAX (a key German stock index), which fell on Thursday. But some analysts were disappointed they didnt rise more, with the coveted pop thats characterized many high-profile listings in recent years. It could be that even Porsche can only shine so brightly against the current dim economic backdrop.

The bigger picture: Porsche outshines its own parent.
This listing gives Porsche a valuation close to that of its own parent company, which is made up of Audi, Skoda, Seat, and the VW brand itself, among others. That may sound strange but it makes sense given that Porsches electrification progress is miles ahead of the other brands. (Its first foray into electric sports cars is already outselling its flagship 911.) Add its healthier profit margins and legions of die-hard fans to the mix, and suddenly Porsches unique valuation starts to seem more sensible.

Originally posted as part of the Finimize daily email.

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