It was quite a wave of announcements, and it resonated with investors: Volkswagen’s major shares in Frankfurt are up nearly 20% last week, bringing profits to 45% in 2021. Meanwhile, less liquid common stocks are up 65%, even with a sharp drop on Friday.
US retailers also joined in, dramatically increasing the company’s thinly traded US certificates (ADR). ADRs allow investors to buy and sell foreign stocks on US stock exchanges.
Volkswagen has been clear about the enormity of its electric ambitions – it is investing € 35 billion ($ 42 billion) in the technology – making the timing of the stock increase difficult to fully explain.
Call it the Tesla Effect: Elon Musk’s electric carmaker 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 Volkswagen is now starting to look more like Tesla in the way that investors give the most. Tesla could be rivaled by Volkswagen as early as 2022, according to UBS analysts, who predict that the owner of Audi and Porsche will sell 300,000 more electric vehicles than Tesla by 2025.
Volkswagen’s technical ambitions are even more important. It is hard at work upgrading its software capabilities and announced this month that the first over-the-air updates are coming to the ID.3 this summer.
Diess even acts a bit more like Musk. The German CEO has joined Twitter and his presentations to investors and the media are starting to take on a very “tech startup” feel, with sleek decks.
UBS analysts told reporters last week that investors haven’t seen the speed at which Volkswagen is gaining ground on Tesla.
“We are more confident than ever that Volkswagen will deliver the unique combination of volume growth that will make them the largest in the world [electric] UBS analyst Patrick Hummel said recently, “UBS analyst Patrick Hummel said recently,” while their margins will be stable or even grow from here. That is not appreciated at all. ”
Volkswagen, General Motors and Ford are good examples of established companies finding new ways of doing business despite the massive changes brought about by the climate crisis.
Energy companies face similar challenges. One reason is that the International Energy Agency said last week that gasoline demand has peaked.
“Gasoline demand is unlikely to return to its 2019 levels as efficiency gains and the shift to electric vehicles overshadow robust mobility growth in developing countries,” the IEA said in a report.
What will we learn from GameStop earnings?
The controversial retailer was at the center of a trading frenzy in January, sparked by retailers on the Reddit forum WallStreetBets. Redditors cheered as GameStop took to the air. They featured diamond emojis (a reference to the long-term holding of a 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 the thing: some of these traders invested in GameStop because they wanted to punish hedge funds who bet the stock would fall. But others felt that the company is undervalued and could benefit from the rising interest in video games and new consoles during the pandemic.
Will the results indicate a recovery? That is unclear. But do the results matter to the Reddit audience? Also unclear.
Next one
Monday: Existing home sales in the US; Tencent Music Income
Tuesday: Sales of new homes in the US; Adobe and GameStop earnings
Wednesday: EIA report on crude oil stocks; Income of General Mills
Thursday: US unemployment claims; GDP in the fourth quarter of the US (third estimate)