Filed under: Etc., Euro, Volkswagen, Earnings/Financials
Volkswagen temporarily becomes largest company in the world
The NFL season is clearly out of control, Audi just crossed the country in a bunch of diesels you can't buy here, and GM wants to "merge" with Chrysler. But it's not just America that's home to the madness: Ferrari might leave F1, Mitsuoka is selling this thing for €70,000, and today, for a brief moment, Volkswagen was the most valuable company in the entire world based on market capitalization. The reason: Porsche announced it would up its stake in the company to 75-percent. That blasted VW's €210 euro-per-share price up to €1,000 per share, making it more valuable than ExxonMobil and giving Ferdinand Piech reason to start practicing some lines from Scarface. The shares ended the day at €643, which is still pretty good for paper that could be had for less than €200 just about a month ago... Thanks for the tip, Kris!
[Source: Seeking Alpha]
Reader Comments (Page 1 of 2)
stevereportdotcom 7:10PM (10/28/2008)
Yes this is great news. With Porsche as the parent company, it will make owning a VW more "cool."
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Flea 7:10PM (10/28/2008)
see, I hate being a student with no revenue now. With enough money in my pockets I'd have bought VW stock in june already.
I also wonder why the markets only reacted to this right now. I mean, bloggers have known Porsche was going to eat VW since spring...
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3seriesisking 8:55PM (10/28/2008)
I'm right there with ya' Flea, the bad news for us students is that it doesn't look like we'll be getting any real help for a while as far as paying for our practically mandatory education. Maybe by the time our kids get into college things will be looking up and they could actually be making investments for the future instead of slipping further into debt in a vacuum economy.
Level 7:13PM (10/28/2008)
I guess its time to buy some cheap GM stock ;)
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Mobius_1 9:42PM (10/28/2008)
Well, if you are waiting for Callaway to take over GM, it's gonna take a while...
Robert 7:22PM (10/28/2008)
Consumer Reports reliability ratings show a half-red dot for only one VW model (Rabbit). Every other model is either unknown (Tiguan), average (Jetta and Eos), half-black (GTI) or solid black (Beetle, Passat, Touareg).
This is from the 2008 Car issue. I guess either Consumer Reports is dead wrong, or people just don't read.
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HAWC1506 7:45PM (10/28/2008)
J.D. powers has the Passat rated better than the Camry, totally made my day lol
HAWC1506 7:46PM (10/28/2008)
Oh yeah here's the link:
http://www.jdpower.com/autos/Volkswagen/Passat/2008/Sedan/ratings
tekd 7:56PM (10/28/2008)
I don't really think the JD Power long term reliability ratings make any sense, especially since the older Passats did horribly in their own ratings and actually dropped in reliability from 06 to 07.
http://www.jdpower.com/autos/Volkswagen/Passat/2006/Sedan/ratings
http://www.jdpower.com/autos/Volkswagen/Passat/2007/Sedan/ratings
How does JD Power go from saying that VWs actually got less reliable from 06 to 07, to suddenly deciding that the 2008 Passat will be reliable long term? Did they pull this 4 and a half star "Predicted Reliability" rating out of their asses?
Anyways, anybody who believes this 4 and a half star "Predicted Reliability" rating probably thinks Land Rovers are reliable SUVs too.
Nikhil 7:39PM (10/28/2008)
the markets just reacted because of the latest disclosure to the markets of Porsche's stake of VW. The fact that Porsche wanted 75% of VW to take the healm is nothing new, and thus, that is why the markets did not react significantly.
The tremendous upshot in the value of each share was a result of the fact that Porsche disclosed that, through the use of derivatives, which it was not required to disclose, its ownership stake in VW was 74% or so, not the 35%+ that most thought it was.
That said, since the announcement, a bunch of hedge funds were required to rapidly gobble up shares of VW to cover their short positions because the bloody fools were all betting that VW's stock was going to tank.
Prior to Porsche's announcement, the free float was substantial (at least 45% excluding the assumed 35% held by Porsche and the 20% held by the State of Lower Saxony). So you see, this rocket ship explosion (Go Porsche!) was the doing of their financial prowess and wizardry to use derivatives to gobble up another 40% and thus rapidly decrease the free float of shares by which prices would seemingly correct, or remain rational. With the substantial decrease in the shares available, there was a shortage of shares available at a reduced rate by which fools betting for VW to tank needed to cover their positions.
The long answer to the question posed is that Porsche just told the world that it arguably not only one of the finest car manufacturers around, but arguably one of the baddest ass hedge funds to hail from Germany!
Who's the baddest hedge fund now?
Porsche - My thoughts exactly!!!
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jpc 7:42PM (10/28/2008)
beat me to it
jpc 7:41PM (10/28/2008)
this has absolutely NOTHING to do with the perceived value of VW... NOTHING. This is simply a short covering squeeze. All these hedge funds and investment funds are shorting every automaker, when it came out that Porsche had snuck up and upped it's ownership to ~75% these funds freaked out. When they short a stock they have to 'borrow it' and hope to buy it back at a lower level later and pocket the different. Think about this, Porsche owns ~75%, lower Saxony owns 20%, that means that at any given point today there were only 5% of total VW shares in play creating a MASSIVE disparity between VW's market cap and it's 'actual value'. The stock will tank shortly back into the 175-200 euro realm once all the players shorting VW get shaken out.
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Greg 7:49PM (10/28/2008)
Bloomberg says it's the second biggest company now, at $351 billion.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aF074DUCFYcE&refer=home
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GM786 12:12AM (10/29/2008)
The same goes for Consumer Reports buddy. CR are some shady biased losers. I actually trust JD Power more than CR although I'm skeptical of both of their Automotive Dependability surveys.
nagmashot 1:38AM (10/29/2008)
yesterday Volkswagen stock finished at 945Euro....
Porsche schooled Hedge fond managers a hard leasson with gambling with empty buys. That Porsche wants more stock of VW was a well known news... they want till end of this year 50%... the shocking news for Hedge Fond manager was that they already have the option on 31.5% of the other avaible stocks.. in fact since sunday Porsche controlls 74.1% of the VW stocks (42.6% they realy own + 31.5% buy option) ... lower saxony owns 20.25%, that left 5.65% of the stocks free for trade. Hedge Fonds did the last days some 10-12% empty buys with VW stocks in the hope the worth drop... that gambler lost badly according to Financial Times Hedge Fonds lost on monday some 10-15billion Euro and yesterday it was even more worse for them..
OWNED
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Touareger 1:42AM (10/29/2008)
Well, the consumer Reports said my Touareg is worse kind in Upscale SUV, however, I only had a few minor problems (if it counts: Radio, battery, and brake light bulb) for the past 5 years.
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HotRodzNKustoms 1:44AM (10/29/2008)
I think my head just exploded...
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fixitfixitstop 11:39AM (10/29/2008)
But how is the NFL season out of control?
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Iridium 12:08PM (10/29/2008)
Yay, another figure that shows that the stock market is nothing more than a Vegas casino.
There is no justifiaction for VW to trade at 643 euro so the stock has to come crashing down. If it stays there then VW should immediatly drop the price of every car 5k.
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N 12:50PM (10/29/2008)
According to BBC News, the Hedge Funds that were short selling VW shares have lost approximately £18 billion this week (approximately $30 billion USD)...
Well done Porsche in managing to get those monkeys who work in the markets to "indirectly and inadvertently borrowing shares from Porsche, selling them to Porsche, buying them back from Porsche and then returning them to Porsche"... Truly awesome!
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