Porsche AG (OTC:POAHY) investors are grappling with a reality that is far from the supercar stock they had envisioned when the company was spun off by Volkswagen AG (OTC:VWAGY) in 2022.
What Happened: Bloomberg reported on Tuesday that the investors’ optimism has been dampened by a series of setbacks, including a decline in the company’s market value and a decrease in its price-to-earnings multiple.
The company’s market value has decreased by about a fifth since the beginning of last year, bringing it closer to that of its former parent, Volkswagen AG. This is a significant shift from the initial €40 billion ($43 billion) gap.
"You thought you were buying into a business that was stable and improving, and it turns out that's not the case," said Jefferies analyst Philippe Houchois.
"The question is, when do we start upgrading numbers?"
China, historically Porsche’s largest market, has experienced a downturn, and production issues have affected the rollout of crucial models, including the electric version of the Macan SUV.
These challenges have led to a decrease in Porsche’s price-to-earnings multiple, which is now less than a quarter of Ferrari’s. The company has also predicted that its 2024 sales volumes will likely remain flat.
Bernstein automotive analyst Daniel Roeska quipped, "Porsche is becoming a cyclical stock that is dependent on the model cycle ...