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Volkswagen shares spike over $1,250 to become most valuable company in world

 
3 4,001 views Oct 28, 2008
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2009 volkswagen cc 009

The four-door coupe for the masses employs technology to get its top rating

The four-door coupe for the masses employs technology to get its top rating

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Infighting with new owner Porsche has led many to fret over Volkswagen's future, but company officials insist the struggles are being blown out of proportion, just today releasing a statement of cooperation that appears to have put the fighting to an end. Whatever the case, the stock markets are confident the company will succeed - VW's stock briefly touched €1,005 ($1,261) yesterday, making the company the most valuable in the world at roughly €295 billion, or $369 billion, temporarily exceeding Exxon-Mobil's $343 billion market capitalization.

Earlier this month, VW's share value had risen by almost 55% to give the Volkswagen AG the largest market value of any carmaker in the world at $127.5 billion, exceeding even Toyota's valuation by about $3 billion, thanks in part to the Japanese company having fallen to a four-year low in its stock price, down 56% since its peak in February 2007. The newest jump in valuation comes on the heels of Monday's announcement of Porsche's new 42.6% holding and 74.1% control option in VW. At the end of trading yesterday, VW's share price closed at €675 ($847), a gain of 33% on the day, but not enough to hold onto the title of world's largest company by market capitalization.

The secret to VW's earlier valuation success, say the analysts, lay in its successful hedge-fund trading strategies. It certainly didn't come from the company's automotive sales strategies in the U.S., as the company's efforts in the world's largest carmarket of late have been underwhelming at best. A new resurgence of effort hopes to turn that tide, however, and set VW on the path to unseating Toyota from its position as the world's most prolific automaker as well. At any rate, VW has said it sees Toyota as its only real competition on the global stage.

Part of VW's U.S. plans, in addition to a new model surge, include the construction of a new vehicle assembly plant in Chattanooga, Tennessee. The $1 billion facility will be used initially to produce a midsize sedan designed specifically for the North American market. The car is expected to be based on the Passat and is being designed to rival the Honda Accord and Toyota Camry. It could also be joined by a new midsized SUV designed to sit between the current Tiguan and Touareg models, and Audi CEO Rupert Stadler has also hinted at building some Audi models at the site to help avoid currency exchange rate fluctuations between the dollar and the euro.
2009 Volkswagen CC

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Comments (3)

  1. ma_HECTOR avatar HECTOR Posted: 10/8/2008 4:09am PDT

    I'll be the first to admit I don't understand much about economics but there's a line in the article that should give us all pause:

    *QUOTE*
    The real secret to VW's valuation success, say the analysts, lies in its successful hedge-fund trading strategies. It certainly doesn't lie in the company's automotive sales strategies in the U.S., as the company's efforts in the world's largest carmarket of late have been underwhelming at best.
    *UNQUOTE*

    So... just empty BS then...
     
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  2. ma_NoNameDenton avatar NoNameDenton Posted: 10/8/2008 11:24am PDT

    Good for them, helps that they surpassed Ford as number 3 in the world.
     
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  3. ma_HECTOR avatar HECTOR Posted: 10/28/2008 5:18pm PDT

    I am as ignorant of economic complexities as I was on Oct 8. But maybe someone can tell me how a company that is being swallowed whole by another company 10 times smaller can be the most valuable enterprise in the world.

    VW share reached over $1200 in value yesterday. If that's not proof that these investors have to freaking idea of what they're doing I don't know what is. Some people made a killing yesterday. Many will soon lose their shirts. I did not invest in Google and I will not invest in VW.
     
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