Analysts Are Not As Excited About the Looming Porsche IPO As Volkswagen Is

Porsche 9 photos
Photo: Porsche
Investors are not convinced that Volkswagen AG's Porsche brand compares with other luxury brands like Ferrari or Louis Vuitton, as the company claims.
Volkswagen has recruited over a dozen banks to help push an IPO that could become the biggest ever in Europe. According to people close to the matter, the offering could bring in as much as 80 billion Euros ($80.5 billion) which would surpass the market value of their parent company. Volkswagen is planning a September offering to help it endure slumping sales amid supply chain headaches and costs associated with transitioning from gas-powered vehicles to electric vehicles.

Volkswagen has characterized its business akin to the French handbag maker and Cartier owner Richemont, as a business that generates robust profits and notable sales volumes. Ferrari manages to maintain healthy margins by selling only a fraction of the 300,000 vehicles Porsche sells in a year.

The IPO market right now is facing severe headwinds given the runaway global inflation, rising interest rates, and the ongoing Russia-Ukraine conflict.Porsche isn’t a safe bet in a recession because it’s not as exclusive as Ferrari,” said Daniel Roeska, an auto analyst at Bernstein who stated to Bloomberg. Porsche does not stand alone and does not make decisions autonomously as they are part of a group. The IPO will not create any degree of independence from Volkswagen AG and, thus, not maximize shareholder value.

Volkswagen has not put a forecast out on valuation, but fund managers in both Europe and the U.S. who met with VW, left impressed with Porsche's brand strength and the company's ability to increase profit margins.

Porsche for its part is miles ahead of other luxury sports car brands when it comes to electrification of its lineup. In 2021, 13.7% of Porsche sales were electric up over 10.6% from the previous year. Ferrari will not launch its first electric automobile until 2025.
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