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The intricacies of the Porsche IPO.

Published by: Lucien Paulemil
June 28, 2022 4:47 pm

One of the most exciting potential IPOs that has the market’s attention is that of German automobile giant Porsche.  Known for their high-performance sports cars and one of the most aspirational brands in the world, the company is set to IPO in late 2022 according to reports.  This will be the first time that the public will have a chance to own a piece of this iconic company and in this article, we’re going to unpack some of what that means.

Understanding Porsche’s Value

Market analysts value the company at somewhere around $102bn, which is in excellent company with some of the largest automobile companies in the world.  This is buoyed by the strong brand and fanatical fan base that continues to drive the company’s growth forward.  Over the past ten years, the company has seen a dramatic improvement in their earnings, taking revenue from $11.42bn in 2011 to $31.75bn in 2021.  This is really impressive performance, especially through a pandemic where car sales were down across the board.

This shows that the company has a legacy and a history that will carry it long into the future.  Investors who are waiting to get into this IPO are betting on the fact that the brand will grow from strength to strength and deliver robust returns for the medium and long term.

The company has also stated that one of the primary reasons for undertaking an IPO at this time is to raise the funds needed to invest much more heavily into electric vehicles.  This is becoming a key component of our modern ecosystem as sustainability takes a prime seat – and so additional focus here is a necessity.  Some even see this inflection point as a line in the sand where Porsche takes its luxury and status into the electric car market proper.

Why Are There Two Different Porsche Companies?

It’s also worth explaining some confusion between the Porsche legal entities.  Currently, Volkswagen (VWAGY) actually owns Porsche AG, which is what you would consider the Porsche entity that is to be listed.  However, there is another parent company above called Porsche Automobile Holding SE (POAHF) that owns Volkswagen.  So, from the outside, things can look perplexing.

In reality, the holding company Porsche SE simply represents the Porsche family’s interest in the entity.  It is merely a corporate operation and does not get involved in any of the day-to-day operations.  This IPO will be the listing of Porsche AG which would then exit the Volkswagen stable and list on its own.

However, there are further intricacies here.  According to reports, Volkswagen intends to split the shares into common and preferred shares – with only an effective 12.5% of the total shares to be listed.  This still provides an opportunity to buy in but not to the scale that many might have expected.

Is the Porsche IPO a Good Investment?

It’s hard to tell at this stage whether a potential Porsche IPO represents a good buying opportunity for investors.  A lot will come down to how much you believe in the electric future of the company (which will continue to become more important) as well as the brand’s resilience to changing market conditions.

2022 has thus far proved a difficult time for global markets, with rising inflation and challenging macroeconomic conditions placing a lot of downward pressure on stocks of all kinds.  So, it’s certainly a difficult time to bring a company to the public markets because of the sentiment.  However, if you look at the other side of the coin – this might represent one of the few opportunities to get wonderful yields on a company that has proven itself time and time again over the years.

Operating margins remain incredibly strong, and car sales continue to rise despite all the world has been through over the last 2 years.  Add to this the fact that the target market (highly affluent) is undoubtedly the least affected by larger economic shifts – they are likely to be more resilient than most when it comes to holding sales volumes.  

One negative of the Porsche IPO is that it looks like ordinary investors won’t get voting rights.  The way that they seem to be setting up the ordinary and preferred share split makes it seem ordinary retail investors won’t be able to vote – reserving that for the parent company.  With that being said, many retail investors aren't really concerned about this and only want to earn the dividends and capital appreciation – without being directly involved. So, this concern would only impact a small portion of investors.

All in all, Porsche is one of the most anticipated IPOs out there – and for good reason.  It’s a well-established company with a strong brand and a cultural cache that is invaluable.  The IPO is set to be just another step forward for one of the most iconic automobile manufacturers the world has ever seen.

The Porsche IPO Is Getting Closer, Register For Share Allocation Updates at https://porsche.iposhareprice.com/

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