Porsche’s $72 billion offering by parent firm Volkswagen, shares of the sports car manufacturer, plummeted beneath their listing price on Monday just three days after trading start.
Despite a backdrop of unstable global markets, the carefully awaited initial public offering (IPO) was the largest listing in Germany in more than 25 years.
Porsche shares dropped to 81 euros on Monday, 1.8% under the IPO price of 82.50 euros. They were trading at 81.48 euros per share at 1100 GMT, down 1.1%.
Also, the overall market was down as well, with a sub-index of auto stocks down by approximately 1.1% and the pan-European STOXX 600 index shedding 0.6%.
While shares of the automaker are down, they are still doing well compared to considerably larger reductions on the larger market over the past three days, according to a banker involved in the Porsche IPO.
Moreover, for the first two trading days on Thursday and Friday, Porsche shares kept their price from falling below their IPO pricing, closing both days’ trading at 82.50 euros.
A second banker who was engaged in the transaction stated that the decline in Porsche stock on Monday was likely caused by a shift in risk perception.
The overall auto industry is down around 5.6% since the firm debuted, while shares of parent company Volkswagen are down about 10%.
The sale included a “greenshoe option,” which is customary in an IPO, which enables a stabilization manager to buy shares on the market at the IPO price in the first 30 days following listing in order to help maintain price stability.
In Porsche’s initial public offering, the “greenshoe option” represents around 15% of the base offering, which will increase from 8.2 billion euros to 9.4 billion euros if the option is fully exercised.
Oliver Blume, the CEO of both Volkswagen and Porsche, has stated that the company that produces the classic 911 car will win over investors by demonstrating resiliency, as it has done in recent crises, such as the pandemic and ensuing chip shortage.
