Are you wondering which Volkswagen Stock To Buy? this could be one hell of a tough decision, so we’ve put up the options available as well which one we recommend.
With the old world automaker’s EV plans gaining momentum, let’s go over the many Volkswagen stock and which one you should buy.
Volkswagen’s (OTCMKTS: VWAGY) stock has had a fantastic start to 2021, rising nearly 60% YTD on expectations that the German automaker could soon overtake Tesla’s (NASDAQ: TSLA) EV crown.
VW declared in July that it intends to be entirely electric in Europe by 2033. In addition, in response to President Joe Biden’s drive for more electric vehicles, the business is contemplating “major” modifications to its U.S. EV Program.
By pushing plans to lower battery costs and establish six Gigafactories in Europe by 2030, Volkswagen hopes to match Tesla’s sales as early as next year, and possibly beat it by 2025.
Indeed, Tesla has lofty goals, and it appears that it now has a genuine adversary in a ‘old world’ car industry.
Volkswagen’s latest electric SUV, the ID.4, is now available for purchase in Europe, China, and the United States. On a single charge, it has a driving range of 248-342 miles. SEAT, another VW subsidiary, has also announced intentions to bring a range of compact SUVs to market by 2025, raising expectations even higher across the VW group.
With all of this attention on Volkswagen, retail investors have flocked to the stock, which is currently trading at roughly $32-$33 per share.
When searching for VW stock, you’ll find that the firm has over 20 ticker symbols, which can be perplexing. As a result, we’ve broken it down for you.
Here Are Three Volkswagen Stock You Many Consider Buying
1.Porsche Holding Co
Wall Street investor Michael Burry, who inspired ‘The Big Short,’ declared in a now-deleted tweet that he was optimistic on Volkswagen and had purchased shares in Porsche Holding Co (OTCMKTS: POAHY), the company’s main shareholder.
This ticker is one option to invest in Volkswagen and Porsche’s other interests. However, this stock hasn’t quite reached the heights of VW’s share prices in recent weeks, owing to a lack of information among retail investors about how the company’s share ownership is structured.
Volkswagen Ordinary Shares (OTCMKTS: VWAGY) provide voting rights to shareholders at the company’s annual general meeting.
They are the less liquid of VW’s two own shares, which, as previously stated, are dominated by long-term investors such as Porsche. Because there are so few of these shares available, the price has risen over 70% year to date.
Volkswagen Preferred Shares (OTCMKTS: VWAPY) have historically been traded in substantially higher volumes than their ordinary shares, making them more liquid. These don’t have voting rights, but they do have first priority in the event of any company issues, such as dividend payments to shareholders.
Which Volkswagen stock should I Buy?
Your decision on which Volkswagen stock to buy should be based on the previous volume of purchases and overall liquidity of the shares. The concern is that the Ordinary shares will begin to fall in value in comparison to Porsche and VW Preferred Shares. The other two classes of shares may experience a positive, neutral, or negative impact as a result of this.
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Do Not Buy The Wrong Volkswagen Stock
If you locate two almost identical Volkswagens on a dealer lot, one costs 25% less than the other, it should be self-evident that you should buy the cheaper one.
A surprising number of investors appear to be forgetting that the stock market follows the same rationale.
Between the price of Volkswagen AG’s ordinary shares (VOW), which are currently trading at €299 (about $354), and its preferred shares (VOW3), which are currently trading at €225, a gap or spread has developed up.
Knowing the right Volkswagen Stock to buy will save you some few bulk, and still offer closely similar benefits.
The latter aren’t your typical debt-like preferred shares; they’re just like regular shares except they don’t have voting rights. There would be two different share classes in the United States.
The spread infamously exploded in 2008, when Porsche SE attempted to take over Volkswagen.
That drama finished with VW taking over Porsche’s car-making division, Porsche AG, leaving behind an investment firm, Porsche SE (PAH3), with around 53 percent of VW’s ordinary shares and a slew of litigation as a result of a short squeeze that temporarily made VW the world’s most valuable corporation.
Volkswagen ordinary and preferred shares have rarely traded out of line since that drama.
This time, the Porsche SE isn’t a suspect. The corporation claims that its position in Volkswagen hasn’t altered in recent weeks, and it’s difficult to see why it would risk further legal challenges.
Concerning which Volkswagen Stock To Buy, Brokers on the other hand, are blaming unsophisticated American investors. They appear to be purchasing VW regular shares without recognizing that the perplexingly called preferred shares give the same benefits for a lower price.
The volume of trading in American depositary receipts (ADRs) that mirror Volkswagen’s ordinary shares (VWAGY) has increased, as has the volume of Google searches for the VWAGY ticker.
VW, like GM, has positioned itself as the incumbent automaker to compete with Tesla.
The message appears to be getting through to the kind of individual stock pickers who are also buying U.S. and Chinese electric-vehicle firms, especially since a “Power Day” last week that echoed Elon Musk’s September “Battery Day.”
The potential spinoff value of Porsche AG is another reason why VW’s stock has become popular.
In February, Manager Magazin reported that Volkswagen was exploring a minority IPO of its sports-car segment, which is by far its most profitable division, to raise funding for its electric drive.
A sale would help bridge the gap between VW’s stock market valuation and bankers’ “sum-of-the-parts” estimations of the value of its constituent sections.
The ordinary shares have been in high demand, but supply has been limited. In addition to Porsche SE’s controlling stake, the German state of Lower Saxony owns a 20% investment, and the Qatar Investment Authority owns a 17% stake. This leaves the ADR managers with around 10% free float with which to cover their risk.
You can learn more about this on the Volkswagen official website
A hedge-fund short squeeze, reminiscent of 2008, may be compounding the moves. Buying Porsche SE investment company shares and selling short the VW ordinary shares that ostensibly underpin them is a common arbitrage technique.
With the ordinary-share rally, the transaction has unraveled, causing some investors to flee for shelter.
The strange thing about American investors’ interest in ordinary shares is that ADRs tracking the cheaper, more liquid preferred shares (VWAPY) are also available.
There may be compelling reasons to own Volkswagen stock, but there aren’t compelling ones to own its common stock or ADRs.