Volkswagen valuation is very low. But the reasons for this are deeply rooted in the ownership structure. Supposed bargain
Volkswagen is the most valuable stake in DAX. A price-to-earnings ratio of four means that in four years Volkswagen should be making as much profit as the company as a whole for which it is valued on the stock market. Shares of Dax companies are rated three times higher on average.
There are industry-specific reasons for discounting VW shares. Investors are skeptical that the German automaker will be able to maintain its market leadership in the age of e-cars. But there are also company-specific reasons. In New York and London, the network of Porsche, Volkswagen and Lower Saxony is difficult to explain to high-net-worth market participants.
Domestic investors also note that family businesses are often problematic in and of themselves, but the additional state involvement in Volkswagen tops it all off. Active shareholders cannot shake the VW model, as only preferred shares of VW, Porsche AG and Porsche SE can trade in the DAX. Ordinary shares with voting rights are held firmly in the hands of the Porsche, Piech, Lower Saxony and Qatar families.
So far, the company’s performance hasn’t been bad. For investors, on the other hand, things have looked bad for the past 10 years. The company couldn’t care less. Recently, new capital requirements have been covered mainly by Porsche Holding and from Qatar. How long will this last well? Markets put a big question mark.
