Porsche Shares Plunge After Warning of Reduced Profits
Porsche AG's shares experienced a significant decline of 7% on Friday, marking their steepest drop since the company's initial public offering. The decline is attributed to the carmaker's announcement that the launch of new models and battery-related expenses will negatively impact its anticipated 2025 profits.
Profit Margin Target Adjustment
Porsche's revised profit margin expectations for 2023 have raised concerns among investors. The company now forecasts a margin of only 10-12%, falling short of analysts' projections of 14.8% and well below the mid-term target of 17-19%.
Impact of New Models and Pivot Towards Combustion Engines
The company anticipates an 800-million-euro hit to its profits due to the launch of new combustion engine and plug-in hybrid models. This strategic shift reflects the industry's adaptation to the current low demand for EVs in Europe and intense competition in China.
Investor Concerns and Management Accountability
Deutsche Bank analysts expressed skepticism regarding Porsche's ability to recover investor confidence. The company's performance has been hampered by its struggles to establish EV sales and declining demand in China, its key market.
Porsche SE's Stake Impairment Expectation
Porsche SE, an investment firm controlling Porsche AG and Volkswagen AG, has announced an anticipated impairment on its Porsche AG stake of up to 3.5 billion euros. The holding company also expects writedowns related to Volkswagen to approach the upper limit of its forecast range.
Market Capitalization Decline
Since its stock market debut in 2022, Porsche's market capitalization has reduced by half from its peak of approximately 110 billion euros in May 2023. The company's shares have declined by 27% in 2024.