“Porsche and Telekom?

The comparison lags" - investor advocates on the IPO of the car brand

Created: 09/29/2022, 10:22 am

The Stuttgart carmaker Porsche dares to go public.

(Iconic image) © Silas Stein/dpa

Porsche goes public.

With 75 billion euros, the company immediately becomes a DAX heavyweight.

Investor advocate Ulrich Hocker speaks about the Telekom comparison.

Frankfurt – The VW Group is today listing its subsidiary Porsche on the stock exchange.

It will be the largest German IPO since Telekom in 1996 - and it is taking place during a miserable phase on the stock market.

The leading German index, the Dax, has been down more than 20 percent since the beginning of the year.

With a market value of around 75 billion euros, Porsche immediately became one of the heavyweights in the leading index.

But is that justified at all?

We spoke to investor advocate Ulrich Hocker about this.

The President of the German Association for the Protection of Securities (DSW) has been observing Porsche and VW for many years.

"Waiting a few weeks might pay off, especially in this lousy stock market environment"

Mr Hocker, despite the really bad mood on the financial markets, Porsche is going public.

Is this a good time to go public?

For private investors yes!

You'd rather pay less for a share than more, right?

And the Porsche and Piëch families, who will receive 25 percent of the ordinary shares, will probably be happy about the low price they pay for it.

Due to the poor stock market environment, Porsche and the parent company VW will probably not make as much money as one might have wished at the start of the project.

The result isn't really bad either.

At the subscription period, the rush was so great that only orders at the maximum price were accepted.

Will private investors get anything from the stocks at all?

I'm already assuming that the share will be quoted and will not only go to a few large investors, but also to many private investors.

In the run-up, there were explicit offers to Porsche drivers.

Porsche and VW boss Oliver Blume also specifically advertised that most car fans may not be able to afford a real Porsche, but they can afford the stock.

If you didn't get a share in the subscription: Is it worth buying Porsche shares on the stock exchange on the first day?

The best time to enter cannot be predicted.

However, it is often the case that the shares are traded high on the first few days due to the high demand.

So waiting a few weeks might pay off, especially in this lousy stock market environment.

In Germany only Telekom has gone public so far.

Many investors fell flat on the nose with the Telekom share.

Is something similar threatening again?

Porsche and Telekom?

This comparison limps.

Telekom came onto the floor at high prices in a financial bubble, Porsche did not.

It was heavily regulated by the state and therefore had weak earnings in Germany. Porsche, on the other hand, has been growing for many years, has made high profits and is one of the pioneers in the future area of ​​electromobility.

The conditions are therefore completely different.

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“The IPO is a great thing for Germany as a business location”

Porsche sells 300,000 cars a year and VW over eight million.

Nevertheless, the parent company VW is only worth twice as much as the subsidiary Porsche.

That's not quite the ratio, is it?

Yes, but that's not because Porsche is overvalued.

For comparison: Porsche is worth around 75 billion, VW with common and preferred shares around 140 billion, Tesla 900 billion.

So investors are willing to pay big bucks for technology leaders.

VW has always had a huge conglomerate discount.

Completely wrong, because in addition to Seat and Skoda, Porsche, Audi and Bugatti are really exciting and innovative luxury brands that are part of the group.

Maybe you will notice that now and VW will be evaluated differently.

When Fiat took Ferrari public, that was also the case there.

Private investors receive preferred shares from Porsche.

They don't have voting rights.

Is this a problem?

Not for the normal private investor.

In return, he gets a higher dividend.

However, it is somewhat questionable that the Porsche and Piëch families only had to pay a 7.5 percent premium for the shares with voting rights.

It's actually way too cheap.

Because at VW itself, the difference between the shares with and without voting rights is 30 percent, for example.

What does the IPO mean for Germany as a business location?

It's a great thing for Germany as a business location.

Porsche shows how strong and innovative the German economy is.

And the brand is known worldwide, not just among car fans.

In general, there are an enormous number of exciting companies in Germany that far too often fly under the radar of investors from the USA and other countries.

Hopefully the IPO of Porsche will make them more interested in the German economy.

It could be something like an initial spark for the German financial market.

Interview: Andreas Höss