Porsche tests the IPO market

Thursday, Sep 22nd 2022

Commentary

Porsche races toward IPO

Luxury carmaker Porsche is racing towards the IPO finish line, and it looks like they’re going to be happy with the prize. In what could be Europe’s third largest IPO in history, the company is looking at a valuation between 70 and 75 billion euros. This price would surpass the valuation of German competitors like BMW and Mercedes-Benz. 

Porsche has been off the public markets for over a decade, after Volkswagen bought the luxury carmaker in 2011. The deal proved to be fruitful for both companies, with Porsche reporting an operating profit of nearly $3.5 billion euros for the first half of 2022. 

Porsche’s impressive profit margins are notable, especially given the stock pullbacks for other luxury car makers like Aston Martin and Ferrari. It hasn’t been an easy year for public companies, subject to the highs and lows of the market, and it’s interesting that Volkswagen is eager to drive Porsche straight into the belly of the beast. 

Macroeconomic uncertainty has cooled the once-hot IPO game as countless companies around the globe that recently filed to go public have continued to wait on the sidelines. Even Silicon Valley’s finest start-ups like Stripe and Instacart have been waiting in the queue or have opted to tap the private markets in an effort to avoid the public market fragility.

IPO activity dropped sharply in the first half of 2022. According to data from FactSet, 1073 companies IPO’d in 2021, raising $317 billion; in the first half of 2022, the total was just 92 companies, raising just under $9 billion.

Porsche’s listing will dramatically pull these numbers forward and after a year of tough blows to the market, a potentially successful public offering could set the stage for more companies to test demand for new listings. It’s safe to say all eyes will be on Porsche as the company drives up to the global stage.

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