The up and down of Volkswagen's share price

Jonas Augustin

Jun 2011 · GRIN Verlag

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Essay from the year 2008 in the subject Business economics - Investment and Finance, grade: 1,4, Lancaster University, language: English, abstract: Volkswagen is the fourth largest car manufacturer in the world with 6.2 million cars sold in 2007. Although the whole car industry is suffering badly from the current economic breakdown Volkswagen is still doing relatively well standing to its earnings forecast for 2008. At the moment, Volkswagen is protagonist of one of the largest takeover plans in the car industry. Porsche, a German premium car manufacturer, is trying to acquire the majority in Volkswagen’s stakes. The plans have already been revealed in 2005. However, Porsche does not have the majority stake in Volkswagen yet. It is currently holding 42.6% of the shares as well as options to purchase another 31.5%. On this background, the Volkswagen share showed an incredible development over the past two months. Its share price rose temporarily to a level where Volkswagen was the largest company in the world in terms of market capitalisation. With a lack of fundamental reasons for this, investors broadly discussed what has happened to the share price. This case study reflects the recent development of Volkswagen’s share price and gives reasons for the absurd rise. Finally, it tries to put these incidents in the context of market efficiency on the stock markets.