It was a flurry of ads and resonated with investors: Volkswagen’s main shares in Frankfurt increased by almost 20% last week, bringing its earnings from 2021 to 45%. Meanwhile, its less liquid common shares rose 65%, despite a sharp drop on Friday.
U.S. retail merchants also took action, dramatically increasing the company’s poorly traded American deposit receipts (ADR). ADRs allow investors to buy and sell foreign shares on United States stock exchanges.
Volkswagen was 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 the timing of the stock increase.
Call it the Tesla effect: the electric carmaker headed by Elon Musk has a market value of about $ 625 billion, compared with Volkswagen’s $ 170 billion. Tesla sold about 500,000 cars last year, while Volkswagen delivered 9.3 million.
But Volkswagen is now becoming more like Tesla in the ways that interest investors the most. Tesla could be equated with the sale on sale 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 in 2025.
Volkswagen’s technological ambitions are even more important. It is struggling to update its software resources and revealed it announced this month that the first wireless updates are coming to ID.3 this summer.
Diess is even behaving a little more like Musk. The German CEO has joined Twitter, and his presentations to investors and the media are beginning to feel very “tech startup”, with skillful design decks.
UBS analysts told reporters last week that investors were unable to gauge the speed with which Volkswagen is gaining ground at Tesla.
“We are more confident than ever that Volkswagen will deliver the unique combination of volume growth, making it the largest in the world [electric] The automaker, along with Tesla, as early as next year, “said UBS analyst Patrick Hummel recently,” while its margins will remain stable or even grow from here. This is something totally devalued. ”
Volkswagen, General Motors and Ford are good examples of established companies that find new ways of doing business in the face of the enormous 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.
“Demand for gasoline is unlikely to return to 2019 levels, as efficiency gains and the shift to electric vehicles eclipse the robust growth of mobility in the developing world,” the IEA said in a report.
What will we learn from GameStop earnings?
The distressed retailer was at the center of a commercial frenzy in January, sparked by retail traders on the Reddit WallStreetBets forum. The redditors applauded as GameStop fired. They posted diamond emojis (a reference to maintaining a long-term stock) and titles like “NEXT STOP IS THE BABY OF THE MOON” with rocket emojis, representing the belief that the stock will continue its upward trajectory.
The thing is: some of these brokers invested in GameStop because they wanted to punish hedge funds that bet that the stock would fall. But others believe the company is undervalued and could benefit from increased interest during the pandemic in video games and new consoles.
Will the results indicate a recovery? This is not clear. But do the results matter to the Reddit crowd? Also confused.
Next
Monday: Sales of existing homes in the USA; Tencent Music earnings
Tuesday: Sales of new homes in the USA; Adobe and GameStop earnings
Wednesday: EIA report on crude oil stocks; General Mills profit
Thursday: Unemployment claims in the USA; U.S. fourth quarter GDP (third estimate)