Volkswagen stock forecast: Is a rebound in store?
VW stock has been on a downtrend lately. Can this stock make a comeback this year?
Volkswagen (VOW3) is down nearly 30% so far this year. The stock has been on a downtrend since March 2021, after the company announced moves to become the electric vehicle (EV) market leader.
In October, the initial public offering (IPO) of Porsche (PAH3) saw the company’s shares open at €91 ($88.19), giving it a market capitalisation of €82.9bn – surpassing Volkswagen as the most valuable automaker in Europe.
Is a rebound in store for the Volkswagen stock price, or will its downtrend continue in 2022 and beyond? Join us in this Volkswagen share price forecast as we take a closer look at the price action, fundamentals and the latest Volkswagen stock news to outline plausible scenarios for the future.
History of Volkswagen
Volkswagen, originally called Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH, was founded in Berlin in 1937 after the German government commissioned auto engineer and Porsche AG founder Ferdinand Porsche to design a car suitable for the average citizen – “Volkswagen” means “people’s car” in German. In 1938, the company changed its name to Volkswagenwerk GmBH.
During the Second World War, the company’s factory in Wolfsburg, Germany, switched from car manufacturing to producing armarments for the military. Following the end of the war and Germany’s defeat, the British government took control of the company and used it to produce cars for their army, before returning it to the German state in 1948.
The years that followed saw the production of now-famous Volkswagen vehicles, including the Volkswagen Beetle and the Volkswagen Type 2. In the 1950s, the carmaker began exporting its vehicles overseas and in February 1972, the Volkswagen Beetle surpassed the Ford Model T to become the most produced car of all time, with over 15 million Beetles manufactered.
Volkswagen’s subsidiaries include Audi AG, SEAT and Škoda Auto, among others. As of 10 October 2022, it was the fifth largest automaker in the world, with a market cap of $72.5bn.
Volkswagen stock analysis
The Covid-19 pandemic and subsequent global lockdowns in 2020 saw the VOW3 price fall to its lowest level in almost five years. After starting at €175.60 on 19 March 2020, it sank to €79.38. Over the later months of the year, as economies began opening up, VOW3 seemingly began to recover and closed the year at €152.40.
In 2021, the carmaker announced it was increasing its EV capacity and scaling up MEB (modular electric drive matrix) use. In March, the company stated it planned to deliver a total of 450,000 EVs to customers – more than twice the figure delivered the year before. Volkswagen’s EV sales during the first three-quarters of the year put it in third place, with a 10.1% market share compared to 21.5% for Tesla.
The possibility that the company could increase its share of the EV market had a positive effect on its share price, which skyrocketed throughout the month of March, reaching a high of €249.70 on 6 April.
However, by June 2021 a downtrend began that would last until the end of 2021. Though there were multiple technical rebounds along the road, none led to a higher high, and on 30 December the stock closed at €177.48, having lost nearly all the gains it made from the EV announcement.
VOW3 opened 2022 at $178, and, up until the time of writing, has maintained a relatively stable downward trend, amid geoeconomic uncertainties, rising inflation and numerous central banks around the world raising interest rates.
As of 11 October 2022, the price stood at €122.35.
VOW3 stock fundamental analysis: Latest earnings
On 28 July, Volkswagen released its financial report for first half of 2022. The carmaker reported that from January to June, it sold products worth €132.2bn, a 2% rise compared to the same period a year ago.
Operating profits landed at €13.18bn, resulting in an operating margin of 10%, compared to the €11.35bn and corresponding 8.8% margin that the company reported during the first half of 2021.
After-tax earnings landed at €10.63bn, resulting in fully diluted earnings per share of €20.50.
During this period, the company generated cash flows from operating activities of €16.9bn and invested around €11.4bn in capital expenditures. This resulted in estimated free cash flows of around €5.3bn.
By the end of June 2022, Volkswagen had non-current financial liabilities of €129.1bn, compared to the €131.6bn it had by the end of June 2021. Total assets stood at €546.9bn, including €33.9bn in cash and equivalents and €23.7bn in marketable securities.
Volkswagen (VOW3) stock forecast: Analyst sentiments
According to data compiled by TipRanks (as of 11 October 2022), the consensus rating for Volkswagen stock was a ‘moderate buy’, based on the opinion of 12 analysts. Eight analysts held a ‘buy’ rating, three suggested to ‘hold’ and one suggested ‘sell’.
The consensus Volkswagen stock price target was €198.82 a share, resulting in a potential 60% gain based on the last price of €124.26. The lowest price target was €115 and the highest €316.
Analysts from CNN Business shared a moderately bullish opinion on Volkswagen stock, with two of four analysts polled rating it a ‘buy’ and two a ‘hold’.
Forecasting service Wallet Investor gave a Volkswagen stock forecast for 2022 that suggested the stock could end the year at $144.05. According to the algorithmic forecaster’s longer term Volkswagen stock forecast, VOW3 stock could reach €141.91 by the end of 2023 and €156.51 by the end of 2024.
The site’s Volkswagen stock forecast for 2025 suggested a value of €162.82 by the end of that year. Although Wallet Investor didn’t provide price targets for 2030, its five-year forecast suggested the stock could be at €153.85 by October 2027.
That said, nobody can ever really know what a stock will do in the future. Investors are encouraged to perform their due diligence before making a decision on whether to invest in Volkswagen stock.
When looking for Volkswagen stock predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Projections are based on making fundamental and technical studies of the VOW3 stock’s performance, but past performance is no guarantee of future results.
It is important to do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money.
You should never invest any money that you cannot afford to lose.