A Rare IPO

With stocks in free fall for most of 2022, the market for new stocks, or initial public offerings, has been all but dead. In fact, it's on track to be the slowest year for IPOs in three decades, according to Renaissance Capital, which runs a popular IPO-tracking ETF. According to Renaissance: 

It was the worst third quarter for new issuers in over a decade, with 25 IPOs raising $2.4 billion as the 2022 US IPO market remains on track to raise the lowest proceeds of any year in our firm’s 30+ year history.

That makes tomorrow's trading debut of Porsche particularly notable. The luxury car maker is being spun out of Volkswagen. Demand for Porsche cars remains strong, with the luxury market mostly withstanding an otherwise slowing consumer economy. 

Tonight, Volkswagen priced the sale of Porsche stock at €82.50 per share, or $80, the high end of the company's prior range. At that price, Porsche has a market value of about $75 billion, raising roughly $9 billion for Volkswagen, which is selling 25% of the stock. The stock will trade on the Frankfurt Stock Exchange.

Porsche's value now nearly matches VW's own market value of about $80 billion, despite the parent companies' $275 billion in annual sales. Tesla, it's worth noting, carries a market value of about $900 billion, even though it will have estimated sales of just $86 billion this year. 

Barron's Andrew Bary recently wrote that the Porsche IPO could be a catalyst for VW's stock: 

Volkswagen (ticker: VOW3.Germany), the world’s biggest auto maker in annual sales, at $275 billion, is a prime example. Its U.S.-listed preferred shares of Volkswagen (VWAPY)—effectively nonvoting common shares—are down 25% this year to $15, and trade for just four times projected 2022 earnings of $3.50 per share. The shares yield 5% based on VW’s annual dividend, paid earlier this year.

Volkswagen plans to address its low valuation with an initial public offering in late September or early October of a 25% stake in its Porsche division. A successful offering would be a positive catalyst for VW’s stock.

You can read the rest of Andrew's story here