Porsche Car Holdings: Will the inventory double this yr?

Shares of the holding company Porsche Automotive Holding Company (WKN: PAH003) is under special scrutiny this fiscal year. However, this is due not only to the listing on the stock exchange on DAX, but also to the expected initial public offering of Porsche in the fourth quarter of 2022. Because the listing of the sports car manufacturer on the stock exchange promises many advantages for shareholders of Porsche Automobil Holding and Volkswagen (WKN: 766403).

Subscription as a price driver

Because analysts expect a market capitalization of up to 90 billion euros for Porsche. For comparison: the market value of the entire Volkswagen Group is currently around 98 billion euros. Seems contradictory, but it’s true. Because the stock exchange values ​​the sum of all divisions of a company listed on the stock exchange higher than a single conglomerate group. This is of course an attractive opportunity for shareholders of Porsche Automobile Holdings and Volkswagen. Because it can be assumed that the shares should sustainably rise to the level of an IPO.

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In addition, Porsche’s initial public offering could guarantee long-term price gains. Because it has already been announced that Porsche Automobil Holding will acquire a large pool of shares in the sports car maker. for example Ferrari As a contributor, you can guess where the flight could go. Because Volkswagen currently has a projected P/E (price-to-earnings ratio) for the 2022 fiscal year of 5. On the other hand, Ferrari has an estimated P/E 2022 of 43.16. After the success of the initial public offering, if Porsche shares move a bit in the direction of Ferrari in terms of valuation, it will only be a matter of time before the share price doubles.

Risks

No opportunities without risks. A sentence that every contributor should frame and stick to the fridge. Because investing in Porsche Automobile Holdings or Volkswagen, of course, involves risks. On the other hand, the escalating conflict between Russia and Ukraine could lead to increased resource bottlenecks and planned production shutdowns.

On the other hand, unusually high inflation rates are putting pressure on margins. Because the production of cars consumes huge amounts of resources, energy and human labor. Therefore, in case the group is not able to pass the costs on to the end users to the same extent, the operating margin and thus the company’s results will be affected.

Another risk is the postponement or cancellation of Porsche’s initial public offering. Although this will not directly lead to any significant additional costs to the group, investor disappointment will be significant and price losses will be correspondingly high.

Conclusion

Shares of Volkswagen and Porsche Automobile Holdings remain the hot potato in speculation about a possible initial public offering (IPO) for Porsche. If this is implemented and Porsche gets a company valuation roughly similar to Ferrari’s, it will likely only be a matter of time before the stock price doubles to the current level. Moreover, Volkswagen can taste it and list other subsidiaries such as Audi, Skoda, Lamborghini or Seat on the stock exchange.

However, as an investor, you must not only dream of price gains, but also manage any risks. Therefore, one must still always ensure a wide diversification of the portfolio, so that a single position does not represent more than 5% of the value of the portfolio.

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Michael owns shares in Volkswagen and Porsche Automobile Holdings. The Motley Fool does not own any of the shares mentioned.

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