Finimize - 🚘 Porsche revs its engine

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Today's big stories

Porsche going public is drawing enthusiasm from a timid market
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Japanese inflation's at its highest in over 30 years

VW’s Speeding Ahead With Porsche’s IPO

What’s Going On Here?

Super-charged demand for Porsche shares means Volkswagen is pressing ahead with the luxury carmaker's initial public offering (IPO).

What Does This Mean?

With the average investor currently a bag of nerves, most companies would steer clear of an IPO anytime soon: after all, an atmosphere of lackluster demand and falling prices isn’t very inviting, and a more stable market might be a safer bet. But the world works differently for Volkswagen (VW). Earlier this month, it hinted at strong investor enthusiasm for its planned IPO of Porsche – and on Tuesday, new details suggested that the shares on offer will probably be dwarfed by demand. With state-backed investors like the Norwegian and Qatari wealth funds waiting in line to snap up shares, VW should have no trouble raising the €9.4 billion ($9.4 billion) it’s aiming at on September 29th.

Why Should I Care?

The bigger picture: Still in the lap of luxury.
It pays to be a luxury firm these days. See, new data out this week shows German producer prices – prices paid at the wholesale level – jumped an eye-popping 45.8% in August versus the same month last year (tweet this). For most sellers, the only feasible response involves jacking up prices, at the risk of losing cash-strapped customers. Not so for Porsche, though: would-be owners of 911 Carreras can afford to spend a little more without remortgaging the house, which gives Porsche the power to hike prices and protect profits – making it an attractive pick for investors.

Zooming in: Keeping it in the family.
VW’s also offering 25% of common shares to the Porsche-Piech family, in a deal that will see the founding clan regain control of the company. That’s good news: when it comes to luxury goods, there’s often a trade-off between short-term profits and long-term brand value. Family-controlled companies, taking a longer view of things, are often more interested in brand value over time – a valuable trait in the eyes of long-term investors.

You might also like: How to tell an IPO blockbuster from an IPO flop.

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Analyst Take

Five Things You Need To Know About This Bear Market

By Theodora Lee Joseph, Analyst

With stock markets rallying since June then crashing again, it’s been tough to make heads or tails of this bear market.

But then wild short-term swings like these never send very clear signals.

Good news, then, that Goldman Sachs strategists have analyzed past bear markets and figured out how best to navigate this one.

That’s today’s Insight: five things you need to know about this bear market.

Read or listen to the Insight here

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