It was quite a wave of announcements, and it resonated with investors: Volkswagen’s major shares in Frankfurt rose by almost 20% last week, bringing its 2021 profit to 45%. Meanwhile, its less liquid common stock is up 65%, even with a sharp drop on Friday.
U.S. retailers also embarked on the action, dramatically increasing the company’s thinly traded U.S. deposit receipts (ADR). ADRs allow investors to buy and sell foreign stocks on US stock exchanges.
Volkswagen is clear about the sheer size of its electric ambitions – it is investing € 35 billion ($ 42 billion) in the technology – which could hardly explain the timing of the stock generation.
Call it the Tesla effect: the electric carmaker run by Elon Musk has a market value of about $ 625 billion, compared to $ 170 billion for Volkswagen. Tesla sold about 500,000 cars last year, while Volkswagen delivered 9.3 million.
But Volkswagen is now becoming more like Tesla in the way investors pay the most attention. According to analysts at UBS, who predicted that the owner of Audi and Porsche will sell 300,000 more electric vehicles than Tesla in 2025, Tesla will already be offered for sale with Volkswagen in 2022.
Volkswagen’s technical ambitions matter even more. It is hard at work upgrading its software capabilities and announced this month that the first wireless updates to ID.3 will come this summer.
Diess behaves her even a little more like Musk. The German CEO has joined Twitter, and his offers to investors and the media are starting to feel a very “technical startup” with sleekly designed decks.
UBS analysts told reporters last week that investors could not appreciate the speed with which Volkswagen was winning on Tesla.
“We have more confidence than ever before that Volkswagen will deliver the unique combination of volume growth that will make them the largest in the world. [electric] Patrick Hummel, an analyst at UBS, recently spoke with Tesla as early as next year, while their margins will be stable or even grow from here. This is something that is not appreciated. ‘
Volkswagen, General Motors and Ford are good examples of established companies finding new ways to do business in the face of major 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 had peaked.
“Demand for gasoline is unlikely to return to 2019 levels as efficiency gains and the shift to electric vehicles obscure a strong growth of mobility in the developing world,” the IEA said in a report.
What will we learn from GameStop earnings?
The retailer was at the center of a trading frenzy created by retailers on the WallStreetBets Reddit forum in January. Redditors cheer as GameStop shoots high. They posted diamond emojis (a reference to holding a long-term stock) and titles like “NEXT STOP IS THE MOONBABY” with rocket emojis, believing the stock would continue its upward trajectory.
Here’s the thing: some of these traders invested in GameStop because they wanted to penalize hedge funds that would bet the stock. But others believe the company is undervalued and could benefit from growing interest in the video game and new consoles during the pandemic.
Will the results indicate a setback? It is unclear. But do the results matter to the Reddit crowd? Also unclear.
Following
Monday: US existing home sales; Tencent Music Earnings
Tuesday: US new home sales; Adobe and GameStop earnings
Wednesday: EIA report on crude stocks; General Mill Earnings
Thursday: U.S. Unemployment Claims; US GDP in the fourth quarter (third estimate)