Photo: Volvo
Chinese automotive giant Geely is currently in advanced discussions with banks hoping to list Volvo on the market in what could be one of Europe’s biggest IPOs of the year. The Swedish brand is hoping for a valuation of roughly $20 billion, with the likes of Goldman Sachs and SEB leading the transaction.
According to Autonews Europe, certain people are estimating that Volvo could be set for a valuation that’s as high as $30 billion in the planned Stockholm listing, while others believe a $16 billion valuation would be more realistic, given the company’s revenue outlook.
For Volvo, even that $20 billion valuation would be equivalent to six or seven times its earnings, which is indeed pretty high – and would put the carmaker in line with rivals such as Mercedes-Benz and BMW. At the same time, brands that Volvo clearly won’t touch as far as valuation include General Motors and obviously Tesla, which at one point this year stood as the seventh most valuable company in the world, having even surpassed Facebook.
“The strong margins seen in the first half of 2021 are unlikely sustainable as the market benefited from a strong post-pandemic rebound that is unlikely to continue,” said NordLB automotive analyst Frank Schwope, who estimates Volvo’s value to be in the range of $10 billion to $15 billion.
Of course, as far as Geely is concerned, who bought Volvo for just $1.8 billion, even a $10 billion listing would represent a solid return on its investment.
As of right now, it’s hard to anticipate exactly what the number will be, especially with Volvo themselves saying that sales volumes in the second half of 2021 could fall year-on-year due to material shortages.
From the outside looking in, we can’t help but wonder if this is actually the right time for Volvo to seek an IPO, given the fact that its transformation into a fully electric car company has barely gotten under way.
For Volvo, even that $20 billion valuation would be equivalent to six or seven times its earnings, which is indeed pretty high – and would put the carmaker in line with rivals such as Mercedes-Benz and BMW. At the same time, brands that Volvo clearly won’t touch as far as valuation include General Motors and obviously Tesla, which at one point this year stood as the seventh most valuable company in the world, having even surpassed Facebook.
“The strong margins seen in the first half of 2021 are unlikely sustainable as the market benefited from a strong post-pandemic rebound that is unlikely to continue,” said NordLB automotive analyst Frank Schwope, who estimates Volvo’s value to be in the range of $10 billion to $15 billion.
Of course, as far as Geely is concerned, who bought Volvo for just $1.8 billion, even a $10 billion listing would represent a solid return on its investment.
As of right now, it’s hard to anticipate exactly what the number will be, especially with Volvo themselves saying that sales volumes in the second half of 2021 could fall year-on-year due to material shortages.
From the outside looking in, we can’t help but wonder if this is actually the right time for Volvo to seek an IPO, given the fact that its transformation into a fully electric car company has barely gotten under way.
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