Wild catch-up on Tesla: gamers discover VW shares

Friday March 19, 2021

Wild catch-up on Tesla
Gamers discover the VW share

By Diana Dittmer

Volkswagen's ambitious e-car targets have drawn US retail investors' attention to the automaker. On internet forums like Reddit, they encourage people to gamble together. How hot is the bet on the Tesla chaser? "The giant creates facts," says car expert Dudenhöffer.

This week things are going very quickly at VW. Dieselgate seems to have been forgotten for good, the group is stepping on the gas again with its e-strategy. The transformation should no longer just happen quickly, but at supersonic speed. The gap to the electric car pioneer Tesla is shrinking faster and faster. The stock exchange celebrates.

A comparison of the prices of preferred and common stocks shows where the party is going wildest. The advantages gained a good 14 percent over the course of the week, the tribes almost 30 percent. A clear sign that things are going off in the US. The strains are growing significantly more because in America mainly ADRs, so-called depository receipts, are traded. ADRs are linked to the tribes. In the course of the trading week, things got so hot here that the plus for the tribes in the meantime even amounted to more than 50 percent. This is the strongest increase since the capricious course during the takeover by Porsche in autumn 2008.

It is forums like the "Wall Street Bets" on the Internet platform Reddit that set the pace and pace. "Wall Street Bets" became known through the course hype at Gamestop. In February, US retail investors arranged their concerted actions here, which drove the price of the ailing video game retailer through the roof and put shortsellers in a mess. Today it's bets on VW. How that got trade in the US going is shown by the following figures: On Monday, around three million tribes were traded on Wall Street. This corresponds to twelve times the average volume. Two days later there were already around twelve million ADRs, 48 ​​times the average volume. There seems to be no end in sight. After a slight setback, privileges and trunks continue to rise on Friday, although the upward trend is now slower for the trunks.

In contrast to Gamestop, there is a bet behind the VW rally that is based on fundamental data. It reads: "VW is the new cheaper Tesla". A comparison of the price fluctuations makes it clear what is meant by this: The Tesla share has lost around 20 percent to 648 dollars or 543 euros since the end of January, while the VW assets, which are traded in the Dax, have lost around 40 percent to 292 euros increased. VW is catching up faster than Tesla is losing. This bet has been an issue on Reddit for years. This week she got plenty of new food and has become even more realistic.

Learning from Tesla means learning to win

A year ago, VW boss Herbert Diess complained that VW was rated like a car company, but Tesla was rated like a tech company. This is exactly what is changing right now. "VW was clearly undervalued all the time compared to tech startups like Tesla. The strategic direction and implementation at VW is right," says car expert Ferdinand Dudenhöffer ntv.de. The much greater dangers for VW lurk elsewhere for him: in the old distribution of power. With the German co-determination, the VW law and the shareholding of the state of Lower Saxony, VW has a great political risk, he says.

At the beginning of the month, VW brand boss Ralf Brandstätter hit the bill: "Of all the major manufacturers, Volkswagen has the best chance of winning the race." Brandstätter has been running Wolfsburg's largest brand since Herbert Diess limited himself to the role of CEO. "While the competition is still in the middle of the electrical transformation, we are taking big steps towards digital transformation."

Volkswagen is anticipating strong sales growth for electrified vehicles this year. The core brand of the Wolfsburg-based group plans to sell more than 450,000 electrified cars to customers in 2021. That would be more than twice as many as in the previous year. At the "Power Day" this week, VW also explained how the group intends to accelerate its electrification plans. Six giant factories are to be built in Europe by 2030. The second largest car manufacturer in the world wants to manufacture battery cells on a large scale and thus become independent of Asian suppliers.

One and the same battery cells are to be installed throughout the entire group in all electric models. In addition, the technical principles of all brands are to be standardized. CEO Diess formulated another goal for the group: In five years, its own software for autonomous driving is to be developed. Tesla has shown it, VW is doing it, say observers. The strategy is like one egg to another.

"The giant no longer sleeps"

Copied or not: besides Tesla, VW has probably the most comprehensive strategy for a pure electric car world. Auto expert Dudenhöffer is also convinced of this: "The VW Group with VW-Porsche-Audi is closer to Tesla than many Teslariti believe and want to admit. The VW Power Day showed the dynamism and strength behind the VW Group Riese has not slept for a long time and creates facts in technology, in future also with the solid-state battery, "says the head of the CAR Institute at the University of Duisburg-Essen.

Not only Reddit investors, but also traditional analysis houses are betting on VW's success. The analysts at JP Morgan (JPM) say that investors were extremely "bearish", that is, pessimistic at Volkswagen, in the past year – for many reasons. Now they positively emphasize that the chairman of the board, Diess, has stayed on board and has drawn the supervisory board on his side. They are convinced that VW could develop into a serious competitor for Tesla.

And will Tesla actually see VW's taillights at some point? The analyst firm LMC assumes that the VW Group will gradually expand its market share in the e-car market, while Tesla's share of the overall market will continue to shrink. According to this, the market share of Tesla's electric cars, which was around 20 percent in 2020, will fall to ten percent by 2025, and that of Volkswagen will increase from 10 to 15 percent. However, the competition will then also be greater and manufacturers such as Ford, Toyota, GM and Mercedes will also have increased their shares in the market for electric cars. "If the battery cell supply for the electric cars works properly, VW has the chance to become the world market leader in electric cars in 2022. Then Tesla will no longer be at the top," says Dudenhöffer. The shorter the distance, the closer the date gets, the hotter the bets are likely to get.