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Porsche stock forecast: Can P911 shares extend fast start for sports car maker?

By Rob Griffin

Edited by Jekaterina Drozdovica

17:04, 3 October 2022

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Porsche AG Vz
106.03 USD
0.9 +0.860%
PAH3
Porsche
57.36 USD
-1.04 -1.790%
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137.95 USD
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EU50
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3929.7 USD
-9.7 -0.250%
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Can P911 shares extend fast start for sports car maker? Photo: iQoncept / Shutterstock

Porsche, the German car maker, has floated on the Frankfurt Stock Exchange. What will happen to its stock price over the coming months? 

The company, which trades under the P911 ticker – a nod to one of its most famous designs, the Porsche 911 – was spun off by owner Volkswagen in Europe’s largest stock market float in more than a decade on Thursday 29 September. The launch valued the business at around €78bn.

What will happen to the P911 stock price after the initial public offering (IPO)? Here we take a look at the reasons behind the flotation, examine the company’s recent results and other factors that may shape a Porsche stock forecast. 

What is Porsche? 

Porsche is one of the most famous names in the world of performance cars. Its origins date back to the early 1930s when Ferdinand Porsche opened a design office in Germany.

The first vehicle to display the Porsche name was the 356 roadster, registered on 8 June 1948. Its successor, the 911, became the company’s breakthrough vehicle.

The 911 was unveiled in 1963. Since then, more than a million models have been built.

A remarkable range of vehicles has rolled off the company's production lines, making Porsche one of the world’s most instantly recognisable brands.

According to Porsche’s website, the company had annual sales revenue of €33.1bn, made an operating profit of €5.3bn, and employed more than 36,000 people around the world, as of March 2022.

Prior to the flotation, the brand was owned by Volkswagen AG (VOW3), in which Porsche Automobil Holding SE (PAH3) has a controlling stake.

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Porsche flotation: What does it mean?

Volkswagen AG announced back in February 2022 that it “would examine the feasibility” of a possible IPO. The IPO was confirmed seven months later, completing on 29 September with the ringing of the bell at the Frankfurt Stock Exchange (FSE).

In a statement, the company declared the company was “entering a new era” of increased entrepreneurial flexibility.

Oliver Blume, chairman of the executive board of Porsche AG, thanked the company’s employees as he declared the IPO an historic moment for the company:

“Making our customers’ dreams come true is what drives us. Today, a big dream comes true for us. With the completion of the IPO, we are beginning a new chapter in the unique history of our company.”

Volkswagen has planned an extraordinary general meeting for December 2022 at which it will propose a special dividend amounting to 49% of the total gross proceeds from the placement of the preferred shares and the sale of the ordinary shares to be distributed to shareholders in early 2023.

P911 stock price slipped post-IPO

The P911 stock price hasn’t had much time to settle since the flotation. Movement on the first day of trading was positive, with the stock rising in value from €82.50 to €86.30 by late morning.

However, the stock has since slipped back and was trading around €81.50 as the market opened on 3 October. It’s also worth pointing out that the fall is broadly in line with the drop in the blue-chip Euro Stoxx 50 Index (EU50). 

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Any Porsche stock forecast needs to consider the global financial problems, particularly the ongoing energy and cost of living crisis, and soaring inflation

Electrified future

As with most forward-looking car manufacturers, Porsche has recognised the importance of moving away from petrol engines. In a letter from its executive board, published in the Annual & Sustainability Report 2021, Porsche insisted that electrification remained at the heart of its strategy:

“In 2021, 39% of our new cars delivered to customers in Europe were electrified, either as hybrids or with an all-electric drive. Globally, it was almost 25%. We intend to increase this to over 80% by 2030.”

The company is also looking at how it sources energy for production. “Our activities will therefore also focus on the promotion of sustainable energy sources such as solar arrays and wind turbines,” it added.

Porsche stock forecast: Analyst view

So, what are the Porsche stock predictions from analysts? According to Laura Hoy, ESG and equity analyst at Hargreaves Lansdown, the long-term outlook was strong, even though there were potential negative issues to consider. She noted:

“Porsche makes the bulk of its money selling cars to dealerships. Last year, the group recorded a record 301,915 deliveries, nearly all of which went to dealerships. This isn’t unusual, but in the case of luxury cars, it comes with a layer of risk.”

The main issue is the possibility of discounting quickly eroding brand power. “That means Porsche has to be careful that its dealers don’t end up with too much unsold stock,” she explained.

Hoy also pointed out how Porsche relied on upselling on each of its models in order to gain extra profit. “The top model is often more than double the price of an entry level model,” she said.

Considering the average selling price is €100,000, Porsche’s target market was high-net-worth individuals with more than $1m in assets .Hoy added:

“The good news is this pool of customers is growing. This part of the global population is expected to grow at a compound annual rate of 9% through 2026.”

In addition, Hoy highlighted macroeconomic headwinds that could adversely affect the P911 stock price over the coming year:

“The largest is an economic slowdown that could see car owners making the most of their existing vehicles to cope with rising costs.”

While her P911 stock forecast acknowledged Porsche owners were less exposed, a “prolonged recession” could see the growth in the number of high net worth individuals start to stagnate.:

“Then there are supply chain and cost issues, which threaten to squeeze margins. Parts and labour are becoming more expensive, and if the semiconductor shortage persists, Porsche will be unable to churn out cars as quickly as it might have liked.”

A Porsche share price forecast must also consider how energy shortages over the coming year could pose a threat to the business as the war in Ukraine continues:

“Particularly since most models are made in German factories where the energy crisis has reached a fever pitch.”

The bottom line

It’s too early to say what future holds for the luxury automaker. Analysts are yet to issue their Porsche stock forecast for 2025. A Porsche stock forecast for 2030 could be premature.

It’s important to note that their predictions can be wrong. P911 forecasts shouldn’t be used as a substitute for your own research. 

Always conduct your own due diligence looking at fundamental and technical analysis, the latest news and a wide range of analyst commentary. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose. 

FAQs

Is Porsche a good stock to buy?

This will depend on your opinion of Porsche and the broader market. You will need to carry out your own independent research to draw a conclusion on its prospects. This should include an assessment of its marketplace and competition. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose.

Will Porsche stock go up or down?

No-one can say for definite whether the stock will rise or fall. Many factors will influence a stock price over longer periods. In the case of Porsche, demand from its target customers and global economic concerns could be important factors.

Should I invest in Porsche stock?

That is up to you. Analysts have told us that the longer-term outlook for luxury carmakers is strong, but there are still macroeconomic headwinds such as the broad economic slowdown. You will need to weigh up the pros and cons before deciding.

Always conduct your own due diligence looking at fundamental and technical analysis, the latest news and a wide range of analyst commentary. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose.

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