Porsche’s IPO may be significantly discounted

Porsche has long announced it will get listed on the stock exchange. However, a case of bad timing could mean the car brand may have to reduce its valuation target to pull through.

The company is concerned about the effects of a possible recession, energy shortage, and Russia’s war in Ukraine on its initial public offer.

Porsche had been valued at more than €80 billion ($81.89 billion) by the bankers involved in the IPO, but a steep discount may now be necessary. The German automaker may have to be content with as low as €60 billion ($61 billion).

However, as reported by Reuters, Porsche owners may disagree on how much the company is worth. Another source claimed that investors are yet to agree on what valuation formula to use.

Meanwhile, the company’s chief finance officer, Lutz Meschke, said Porsche is financially resilient. Its revenue is expected to reach €38 billion ($38.69 billion) from €33 billion ($33.6 billion) last year, even though it may deliver five percent fewer cars. It has been diversifying its business as of late, launching an Insurance business in Canada.

It has also expanded its Porsche Drive to Montreal, allowing customers to rent a Taycan for a day or monthly.

Third-party financial institutions have different valuations for Porsche. For example, Bernstein Research puts its value between €55 billion ($56 billion) and €100 billion ($101.8 billion). It puts Porsche’s fair value at €75 billion ($76 billion).

Porsche’s main reason for going public is its EV plan. The company targets 80 percent of its sales to be electric by 2030 and will fund the transition with the proceeds from its IPO. But it believes EVs can earn it more money.

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