Porsche debuted on the share market last week and now it's the single biggest IPO in Europe in a decade.
👉Background: Porsche is the German car maker that specialises in luxury sports cars, SUVs and sedans. Fun fact: Before this big IPO, Porsche was owned by none other than Volkswagen.
👉 What happened: Last week, Volkswagen listed a 12.5% stake in Porsche on the share market and managed to raise over $9 billion USD.
👉 What else: That means Porsche is now valued at around $73 billion USD, which marks the single biggest IPO in Europe in a decade.
💡Sometimes when you love someone, you need to let them go. The challenge for Volkswagen is that it is considered a 'low-growth company'. And these companies are often valued at low-growth multiples of revenue or EBITDA.
💡The problem here is that the low-growth multiples are applied across the whole company…even if it there is a high-growth part of the business. With Porsche stuck inside VW, it wasn't being valued properly.
💡Premium on car brands that have made progress on electrification have received much healthier multiples. Throw in Porsche’s cult-following and chunky profit margins and it makes sense why Porsche is trading so well.
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