Early Tuesday, German newspaper Handelsblatt reported on speculation that auto company Porsche (OTCMKTS:POAHY) could be preparing for a record-breaking initial public offering (IPO). This isn’t even the first time this year that word has spread over a possible Porsche IPO; it’s a popular rumor. However, today it seems the rumors make too much sense to ignore. Regardless of the validity, POAHY stock closed today up 10.59%.
Volkswagen (OTCMKTS:VWAGY), owner of the luxury brand, is allegedly exploring the IPO as a funding mechanism for a costly and time-sensitive shift into electric vehicles (EVs). Logically so. The Porsche Taycan, one of Volkswagen’s most premier EVs across its entire suite of car brands, is a hit. Starting at $82,000, with a 0-to-60 mph time of 2.4 seconds and a six-month waitlist to boot, it’s easy to understand VW’s EV eagerness.
“Buy the rumor” is taking on new meaning as both VW and Porsche are eyeing 10% upward movement amid the chatter.
But Just How Valid Are the Rumors Driving POAHY Stock Higher?
Porsche SE apparently labeled the report “pure speculation,” but anonymous sources from Reuters beg to differ. In May, “two people familiar with the matter” told the outlet that the Porsche and Piech families, the primary stakeholders in Volkswagen, are prepared to sell VW shares in order to fund a Porsche IPO.
With estimates for a Porsche IPO treading between $50 billion and $101 billion, this wouldn’t come as a surprise. The two families could raise close to $17 billion by selling VW shares. That is, while still remaining the largest shareholders in the German automobile titan.
The families’ stake in VW dates back to their ancestor, Ferdinand Porsche, who founded the namesake luxury car brand circa 1931. The two families combined own 31.4% of VW and claim 53% of the voting rights in Porsche.
Despite the lack of evidence, speculation wins the day. But with both VW and POAHY stock up on the day for what is just a flurry of rumors, German auto bulls won’t be complaining.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
