Above all, Porsche warned last month that it was initiating a "strategic realignment." In plain language: a downward revision of both its electric vehicle production targets and the margins that it expects to achieve.
This will require resolving the Chinese issue, on which German manufacturers remain overly dependent. This shift is already visible in Porsche's deliveries: China's share has fallen from 19% to 15%, while North America's share has increased and will soon account for a third of deliveries, as is currently the case in Europe. The remaining fifth of deliveries mainly concerns the Gulf monarchies.
Unsurprisingly, the market does not have the nerve or patience to bear this famous "strategic realignment," and the stock is now trading at its lowest level. Porsche, which was partially floated on the stockmarket three years ago, has seen its market capitalization halved over the period.
Its two main shareholders, the Porsche-Piëch family and the Qatari sovereign wealth fund, control 76% and 5% of the capital respectively. In other words, the free float has been reduced to almost nothing, leaving no room for institutional investors who might want to tip the balance. An amusing footnote: the manufacturer's capital has been divided into 911 million shares.
More agile investors—those who are not constrained by the tiny free float—and who are tempted to bet on a turnaround may prefer to invest directly in the manufacturer rather than in the family holding company Porsche SE, which is also listed and holds stakes in Volkswagen and other entities.
They will be keen to remember the "joke" about the double value trap: that of the European family holding company, which in this case is compounded by that of the automotive sector.
While the Porsche brand remains a real treasure, its margins and model do not benefit from Ferrari's exceptional economic characteristics. We would venture to draw a parallel here between LVMH and Hermès. Nevertheless, the situation could be of interest to value investors as well as dividend seekers and, more broadly, motorsport enthusiasts.
Even in a difficult environment, Porsche remains profitable: in 2024, it generated free cash flow of €2.7bn. Admittedly, it was less pleasing to see the manufacturer pay a dividend of €4.9bn for the financial year, i.e., a distribution that exceeds its profit, with the balance made up by an increase in debt—although the latter remains at a very reasonable level.
On the other hand, H1 2025 results were frankly very poor—by far the worst since its partial IPO, with operating margins falling into single digits for the first time ever.
The stock's current valuation, which has clearly found a floor at €40, reflects a market capitalization of €37bn, equivalent to 13x cash profit for 2024—which we are unlikely to see again anytime soon, given the pressure on margins. This market capitalization remains well above the value of equity, at a multiple of 1.6x that.
A further fall in the share price—for example, when it publishes its nine-month results on October 24—could potentially represent an ideal entry point for fans of the other brand with the prancing horse logo.
