Porsche versus Ferrari, how the Prancing Horse outperforms the German brand on the stock exchange
Ferrari shares increased in value by 36 per cent in one year to EUR 59 billion, Porsche fell by about a third
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Against all expectations. When the Volkswagen spun off Porsche and listed it on 29 September 2022, the investment community had in mind a supercar company that could compete with Ferrari. The dream has not yet become reality and some investors doubt that it ever will.
While the shares Ferrari have increased in value by 36% in one year, with a capitalisation reaching 59 billion euros, Porsche has fallen by a third, dropping below 70 billion and approaching that of the former parent company, around 60. A far cry from the 40 billion of several months ago. Porsche had been declared to be one of the most capitalised car companies. Launched in Frankfurt from the highest price in the range, 82.5 euro, the Stuttgart-based company had started its run, during early trading, from 84 euro. According to the chief financial officer, Lutz Meschke, the brand's valuation aimed to rise to 'over 100 billion by 2026'. In fact, the parabola went from a high of EUR 120 per share, to a market value of EUR 117 billion (April 2023), only to point decisively downwards from July 2023, when the entire industry, on the basis of the forecast of a drop in orders especially on the battery-powered car side, suffered a sharp decline. Today the share price is around EUR 75.
At the same time, Porsche's price/earnings multiple (13.2) fell to about a quarter of Ferrari's (48.4), weighed down by a downturn in China - long Porsche's main market - and by production problems that have stalled the launch of key models, including the electric version of the best-selling Macan SUV. It should be remembered that shortly after the IPO, the p/e had settled at similar values to those of other luxury brands such as LVMH, about half that of the Maranello brand. The share price and initial rally had been fuelled in part by 'Vw stock holders selling Vw and buying Porsche, as well as investors chasing similar gains to those made with the Ferrari listing', recalls Tom Narayan, analyst at RBC Capital Markets. The subsequent collapse had 'more to do with Porsche', he points out.
According to some experts, it may not be so much a question of fundamentals. Rather, it is the perceived lower attractiveness in the medium to long term, in relation to the ability to generate as much value with the Ev (battery electric car) range in the future. And then China, which is worth 30 per cent of global sales, but poses a thousand unknowns. Unjustified fears? Irrational fears of investors? The results will tell.
Indeed, the outlook for 2024 is not rosy: Porsche told analysts last week that sales volumes are likely to be flat.
