Ahead of an IPO, the sports car brand is facing some challenges.
It was early last year when the possibility emerged that the Volkswagen Group would spin off Porsche publicly. With a separate listing for the sports car brand, the VW Group would be in a better position to challenge Tesla and invest further in electromobility. The potential value of a Porsche IPO has fluctuated significantly over the last 18 months or so, however. At one point, it was estimated to be worth up to a staggering $110 billion. That would mean that Porsche would possibly become more valuable than the VW Group as a whole. However, it seems that numerous economic obstacles may force Porsche to settle for a much lower valuation that’s almost half the figure we just mentioned.
Porsche
Referencing people involved with the multi-billion-dollar listing, Reuters is now reporting that the Porsche IPO may be as low as 60 billion euros (about $61 billion at current rates). The ongoing war in Ukraine, the possibility of a recession, and energy shortages are some of the factors that have led to the lowered expectations. Allegedly, several top-tier Porsche officials haven’t agreed on how highly the maker of the 911 and Cayenne should be valued, while another person said that investors haven’t yet pinned down a valuation formula.
A top-20 Volkswagen shareholder isn’t keen on the Porsche IPO at all since the limited amount of stock up for sale will give new shareholders little power. This same shareholder said the IPO would not “create value” in the long term.
Looking at other luxury carmakers doesn’t paint a pretty picture for Porsche. Since the start of the year, Ferrari’s valuation had declined by close to a third and Aston Martin’s market cap has dropped by 57%. Despite this, VW’s chief financial officer said recently that Porsche’s continued resilience despite massive supply chain issues is another reason for the IPO to go ahead.
For both the VW Group as a whole and Porsche individually, the outcome will heavily impact their ambitious electrification goals. Even though it has a continued interest in eFuels, Porsche wants 80% of its vehicle sales to be EVs by 2030, while the VW Group wants to have over 25 EV models by 2030. The debate about Porsche’s IPO value will continue to rage on until the decision is finalized.
