It was a whole series of announcements and resonated among investors: Volkswagen’s major shares in Frankfurt rose nearly 20% last week and rose 20% by 2021. Meanwhile, its less liquid common stock rose 65%, even with a sharp decline on Friday.
U.S. retailers also participated in the action and drastically sent the company’s U.S. depository receipts (ADRs). ADRs allow investors to buy and sell foreign stocks on U.S. stock exchanges.
Volkswagen has been clear about the huge scale of its electric ambitions: it is investing 35 billion euros ($ 42 billion) in technology, making the timing of the increase in shares difficult to fully explain.
Call it the Tesla effect: the electric vehicle manufacturer led by Elon Musk has a market value of about $ 625 billion, compared to Volkswagen’s $ 170 billion. Tesla sold about 500,000 cars last year, while Volkswagen delivered 9.3 million.
But now Volkswagen looks more like Tesla in the way that worries investors the most. According to UBS analysts, which Volkswagen predicts the owner of Audi and Porsche will sell 300,000 more electric vehicles than Tesla in 2025, Volkswagen could equate Tesla to the sale in 2022.
Volkswagen’s technological ambitions are even more important. He is pushing hard to upgrade his software capabilities and revealed that this month he announced that the first wireless upgrades will come to ID.3 this summer.
Diess even behaves a little more like Musk. The German CEO has joined Twitter and his presentations to investors and media are starting to have a “tech startup” feel, with sleek design covers.
UBS analysts told reporters last week that investors failed to appreciate the speed with which Volkswagen is gaining ground on Tesla.
“We are more confident than ever that Volkswagen will offer the unique combination of volume growth, making them the largest in the world [electric] vehicle maker, along with Tesla, as early as next year, ”UBS analyst Patrick Hummel said recently,“ while its margins will be stable or even grow from there. That 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 demand for gasoline has peaked.
“Gasoline demand is unlikely to return to 2019 levels, as gains in efficiency and the shift to electric vehicles overshadow strong growth in mobility in the developing world,” the IEA said in a report.
What will we learn from GameStop’s earnings?
The retailer was at the center of a trade frenzy in January caused by Reddit WallStreetBets forum retailers. Redditors cheered when GameStop fired. They released diamond emojis (a benchmark for maintaining a long-term stock market) and titles like “NEXT STOP IS THE MOON BABY” with rocket emojis, which represent the belief that stocks will continue their upward trajectory.
Here’s what happens: Some of these traders invested in GameStop because they wanted to punish hedge funds that were betting that stocks would fall. But others believed the company is undervalued and could benefit from growing interest during the pandemic for video games and new consoles.
Will the results hint at a rebound? This is not clear. But are the results important to the Reddit crowd? Nor is it clear.
Until next time
Monday: Sale of existing homes in the US; Tencent Music Earnings
Tuesday: Sale of new homes in the US; Adobe and GameStop earnings
Wednesday: EIA report on crude inventories; General Mills earnings
Thursday: Unemployment claims in the US; US fourth quarter GDP (third estimate)