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EV frenzy over Volkswagen shares draws regulator's attention

Stock Markets Mar 18, 2021 01:20PM ET
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2/2 © Reuters. FILE PHOTO: FILE PHOTO: A Volkswagen logo is seen at a construction completion event of SAIC Volkswagen MEB electric vehicle plant in Shanghai 2/2

By Danilo Masoni

(Reuters) - An outsized rally in Volkswagen (DE:VOWG_p) shares has drawn the attention of Germany's top market watchdog as heavy-volume trading spurred by the carmaker' electric vehicle ambitions sent the stock rising as much as 32% this week.

Shares in Volkswagen AG (OTC:VWAGY) reversed course on Thursday, however, after hitting their highest level since April 2015 as regulator BaFin said it was monitoring the share price move and a buying frenzy from the United States appeared to cool down.

A spokeswoman said BaFin was watching the move in a "routine way," without elaborating.

A raft of announcements on its electric vehicle expansion strategy to challenge market leader Tesla (NASDAQ:TSLA) Inc has lifted Volkswagen shares more than 50% so far this year, luring institutional and retail investors globally.

Momentum in the share price grew on Monday after the 83-year-old group unveiled it would build 12 battery cell plants in Europe by 2030 and expand charging infrastructure for electric cars.

Interest from U.S. individual investors was particularly strong. Volumes in its American depositary receipts (ADRs), seen as a proxy for retail traders' interest, peaked at around 20 times the 90-day average on Tuesday.

But on Thursday the U.S.-listed stock halted a five-day winning streak, falling more than 9% in New York trade. That dragged lower shares in Frankfurt, which still remained on course for their best weekly run in nearly a year.

Stefan de Schutter, portfolio manager at Alpha Trading in Frankfurt, said that given the huge price swings, BaFin's move had to be seen as "business as usual".

"The shares are dragged down by the ADRs. Seems as if parts of the trade are unwinding," he said.

Volkswagen's main shares fell more than 2% by 1523 GMT and the less liquid ordinary stock was still up 6% but off highs. Shares of Porsche, which holds 53.1% of the Volkswagen group's voting rights, rose 3%.

Despite the pullback, Volkswagen main shares remained up 19% on the week. The surge has lifted Volkswagen's market value above $160 billion, making it the biggest company of the DAX benchmark index, ahead of software group SAP.

"We fundamentally like the name ... we think not only institutional, but also a wave of private investors is increasingly interested," wrote Barclays (LON:BARC) analysts.

"We think VW ticks all the right boxes and remains very attractively priced," they added.

EV frenzy over Volkswagen shares draws regulator's attention
 

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Comments (4)
William Smith
William Smith Mar 18, 2021 8:10AM ET
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What a joke. VW will be no bigger player in EV than they are in ICE sales.
Mike Beard
Mike Beard Mar 18, 2021 8:10AM ET
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hah. You have ZERO clue what the ****youre talking about!🤣
Mike Goeldi
Mike Goeldi Mar 18, 2021 8:10AM ET
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so would make them the biggest ev player so should have bigger marketcap than tesla lol vw will sell over one million in 2021 nd they just started
ze tzu
ze tzu Mar 18, 2021 6:39AM ET
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this is the same company involved in the emission cheating emission pollution test scandal of their diesel vehicles....
Notvery Goodathis
Peteymcletey Mar 18, 2021 6:39AM ET
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but green
Mike Goeldi
Mike Goeldi Mar 18, 2021 6:39AM ET
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yes but new ceo is great that was in the past now they take over the electroc market
Rolando Kropej
Rolando Kropej Mar 18, 2021 5:52AM ET
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What plans? 240 GWh by 2030 🤣. Giga Berlin alone will have 250 GWh capacity.
WILLIAM Harding
WILLIAM Harding Mar 18, 2021 5:26AM ET
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I have a VW ,it's a piece of junk,cost me more in repairs over 2 years than it cost to buy,I can not wait to get my Tesla Cybertruck
me ish
me ish Mar 18, 2021 5:26AM ET
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that's not the experience of most VW owners over the past twenty years and Tesla has a dreadful reputation on quality and reliability - they still have a long way to go - and then there is Nissan and Hyundai and many other great manufacturers who are making loads of EV models. Tesla did a great job in being first to market and transforming the industry, but the existing players are not taking it lying down.
 
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