The sports car manufacturer Porsche bucked global economic turbulence by debuting on the stock market with a valuation of nearly £70 billion.
In one of Europe’s largest-ever initial public offerings, shares of the Stuttgart-based company began trading in Frankfurt at €82.50 each.
The stock, which has been assigned the ticker ‘P911’ after its iconic 911 model, peaked at €86.76 before returning to its opening price, giving it a market value of £67billion.
Porsche’s performance is closely monitored because it is one of the few spectacular stock market launches still proceeding as unpredictable global markets are devastated by runaway inflation and rising interest rates.
It is the most recent luxury automaker to go public, following Ferrari’s dual listing in the United States and Italy and Aston Martin’s disastrous float in London.
Volkswagen, the owner of Porsche, listed a 12.5% share in the company, raising around £17 billion.
As a homage to its most renowned model, a total of 911 million preferred shares were issued to investors, but they do not hold voting rights.
This means that stock market investors will have little influence on the management of the famed automobile brand.
Oliver Blume, the CEO of both Volkswagen and Porsche, described the acquisition as a “dream come true” for the company.
He stated that the IPO, the largest in Germany since 1996’s Deutsche Telekom, will help to expedite electrification efforts.
Porsche aims to have over 80% of its new vehicles be battery-electric by 2030.
Blume stated, “Our improved degree of autonomy places us in an excellent position to realize our ambitious objectives in the coming years.
Following vastly dissimilar experiences with Ferrari and Aston Martin, Porsche’s performance will be attentively observed.
The latter’s valuation has decreased since it was listed in 2018 for £4.3 billion, whereas Ferrari has flourished, particularly in New York, where it is now worth £32 billion.
Aston Martin has witnessed a decline in its stock price and earlier this month launched a £576 million rights issue to help reduce its debt, invest in future electric vehicles, and get closer to its medium-term revenue goal of $2 billion by 2024-25. In contrast, the share price of Ferrari has increased.
Analysts do not anticipate that Porsche’s performance will pave the way for a fresh wave of initial public offerings (IPOs) or stock market listings.
Klaus Schinkel, managing director and head of Germany at Edison Group, stated, “Porsche’s successful IPO is unquestionably a significant milestone for the German and European equities capital markets.”
He continued, “While it is a welcome indicator that firms may go public despite the current political and economic uncertainty, the Porsche IPO is a highly exceptional circumstance due to its enormous size, strong brand, and key shareholders’ support.”
In 2012, Porsche delivered over 300,000 vehicles worldwide and recorded £4.7 billion in profits. It has factories in Stuttgart and Leipzig and employs over 37,000 people.
Laura Hoy, an analyst at Hargreaves Lansdown, stated, ‘Investors were eager to assume control, with shares issued at the top of the intended range. Despite continued concerns about an escalating cost of living crisis, investors support the group’s proposal.
‘Porsche caters to high-net-worth individuals, a group unlikely to be much affected by cost-of-living hikes.
Thus, sales of automobiles priced in the triple digits will continue to rise while those priced at a lower price point would stall.
