Porsche stock surges in trading debut, defying uncertain market

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Success, performance and best in class are what people expect from Porsche, and it certainly didn’t disappoint on Thursday as shares of the luxury carmaker defied market turmoil in a blockbuster initial public offering.

Its shares traded at 85.68 euros on the Frankfurt Stock Exchange, above the initial public offering (IPO) price of 82.50 euros established Wednesday by German parent company Volkswagen, and outperformed a weak Frankfurt market. Volkswagen raised 9.4 billion euros ($9.1 billion) from the offering and plans to use use the money to invest in software and electric vehicles as global auto industry shifts its focus to the energy transition.

Not only was the offering one of the largest initial public offerings in European history, but it comes against a backdrop of the war in Ukraine, inflation, rising interest rates and a global energy crunch that raised fears of recession in major economies such as Europe and the U.S. The strength of Porsche’s IPO shows a strong brand with solid financials can still attract buyers despite a tenuous economic climate.

What is an IPO?

An IPO stands for initial public offering.

Privately held companies have IPOs to sell shares to the public for the first time to become a publicly traded company. Private companies may do this for various reasons, including raising money to grow their business, pay down debt, or make strategic acquisitions. 

How big was Porsche’s IPO?

It’s the third largest deal in Europe, behind Italian electrical utility Enel in 1999, valued at $16.6 billion, and Deutsche Telekom in 1996, valued at $12.5 billion, according to figures compiled by financial market data provider Refinitiv.

Under Thursday’s offering, Volkswagen sold 12.5% of Porsche to investors in the form of non-voting shares. Another 12.5% plus one share in voting shares was bought at a 7.5% premium by Porsche Automobil Holding SE, representing the Porsche and Piech families, descendants of automotive pioneer Ferdinand Porsche. Their holding is also Volkswagen’s controlling shareholder with 53% of voting shares.

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