It was a rain of ads and resonated with investors: Volkswagen’s main shares in Frankfurt rose by almost 20% last week, bringing its 2021 earnings to 45%. Meanwhile, its less liquid ordinary shares rose 65%, even with a sharp decline on Friday.
U.S. retailers were also involved in the action, dramatically sending thinly traded U.S. depository (ADR) receipts. ADRs allow investors to buy and sell foreign shares on US stock exchanges.
Volkswagen has been clear about the huge scale of its electric ambitions – it is investing € 35 billion ($ 42 billion) in technology – which makes it difficult to fully explain when to grow the stock.
Call it the Tesla effect: the electric car maker led by Elon Musk has a market value of about $ 625 billion, compared to $ 170 billion for Volkswagen. Tesla sold about 500,000 cars last year, while Volkswagen delivered 9.3 million.
But Volkswagen is now becoming more like Tesla in the way investors care most. Tesla could be equated with Volkswagen’s sell-off as early as 2022, according to analysts at UBS, who predict that owner Audi and Porsche will continue to sell 300,000 more electric vehicles than Tesla in 2025.
Volkswagen’s technological ambitions matter even more. It is working to update its software capabilities and revealed this month that the first wireless updates will reach ID.3 this summer.
Diess behaves even more like Musk. The German CEO has joined Twitter, and his presentations to investors and the media are beginning to have a “technological startup” feel to them, with slick design decks.
UBS analysts told reporters last week that investors have failed to appreciate the speed with which Volkswagen is gaining ground in Tesla.
“We are more confident than ever that Volkswagen will offer the unique combination of volume growth, making it the largest in the world [electric] carmaker, along with Tesla, as soon as next year, “UBS analyst Patrick Hummel said recently,” while their margins will be stable or even increase from here. This is totally unappreciated. ”
Volkswagen, General Motors and Ford are good examples of established companies that are finding new ways to do business in the face of the huge changes caused by the climate crisis.
Energy companies face similar challenges. One reason is that the International Energy Agency said last week that gasoline demand had peaked.
“Gasoline demand is unlikely to return to 2019 levels, as increased efficiency and the switch to electric vehicles overshadow a robust increase in mobility in the developing world,” the IEA said in a report.
What will we learn from GameStop winnings?
The retailer was at the center of a trade frenzy in January caused by retailers on the Reddit WallStreetBets forum. Redditors cheered when GameStop grew. They posted diamond emojis (a reference to holding a long-term stock) and titles like “NEXT STOP IS THE MOON BABY” with rocket emojis, representing the belief that the stock will continue its upward trajectory.
Here’s what’s happening: Some of these traders have invested in GameStop because they wanted to punish hedge funds that were betting that the stock would fall. But others thought the company was undervalued and could benefit from increased interest during the pandemic in video games and new consoles.
Do the results indicate a comeback? It is not clear. But does the results matter to the Reddit crowd? Also unclear.
It follows
Months: Existing home sales in the US; Tencent Music Earnings
Tuesday: New home sales in the US; Adobe and GameStop winnings
Wednesday: EIA report on gross stocks; General Mills earnings
Thursday: Unemployment claims in the US; US fourth quarter GDP (third estimate)