Evolution of the value of Volkswagen in Frankfurt since 2011 – Source: Bloomberg
The avalanche of negative information always affects the reputation of a company, and therefore, to its trading. Volkswagen had time to be a value very attractive for its profitability and solidity, is one of the three top manufacturers in the world.
In fact, there was a curious episode in October of 2008, when the actions are fired in the rumorearse that Porsche was going to make a mass acquisition, the 75% shareholder. Only Volkswagen came to have a value higher than the IBEX-35 index integer, that is to say, the 35 most valuable companies in Spain.
Volkswagen came to 1,000 euros per title
Of that episode burbujístico learned a lot, there were a lot of people who became millionaire and that he ruined in a matter of hours. The “correct” value of this company is 150-200 euros. Until the year 2015, the value had a resistance of 200 euros, that is to say, he could not overcome it.
Martin Winterkorn, looking for the ground contribution of VOW:
throughout 2015, the value exceeded eur 200, specifically until 254,99 euros, during the month of April, and maximum in five years. Long before the crisis of the emissions, Volkswagen had already begun to lose steam. In July he returned to fall of 200 euros, losing all progress since February.
When the company does not discover any more scandals it will be time to buy “strong”
In August and September, the value dropped considerably, the market took into account, for example, the decline in enrolments in the chinese market, the most important for Volkswagen. At the outbreak of the crisis of the emissions in the US over the weekend, the first business day after the shares slumped.
The value has reached to drop to 95 euros, something not seen since 2011. It is hard to determine if you can get it back down again, but we can consider it prudent to speak of the 100 euros as a support. That means it is an amount that will not be easy to get off. Not yet announced the next dividend, it is likely that you do not have to pay the costs of the crisis.
According to the 34 analysts surveyed by Financial Times, the council ruling on Volkswagen is “keep”, not to sell the shares already existing. In the second place, it is advisable to “infraponderar”, wager by a reduction in the value. Two months ago, most analysts were recommending “buy”, and in the second place, to “maintain”.
In the medium term, Volkswagen will come out of the crisis because it has a big financial muscle, and can borrow heavily to pay up to 40,000 million euros, which will mean the crisis of the emissions. Unlike General Motors or Ford at the end of 2008, the risk of bankruptcy is distant, although it is not an unlikely scenario.
My personal advice, and I am not a financial analyst, going in the same direction as those experts. The have actions, that does not undo positions (sell) if you do not need to recover immediate liquidity. long term the value has to go back to 150-200 euros, or even more, and give dividends. The bag is sometimes a matter of patience, not of being impulsive.