Stock Analysis | Porsche AG

Dr. Ing. h.c. F. Porsche Aktiengesellschaft | 2024.10

Porsche is a brand with a long tradition and it has a strong, global fan circle. Passion, enthusiasm, a pioneering spirit aimed at driving innovation and agility to adapt quickly in a constantly changing environment are among the core values of the company. Based on 2021 unit sales for the luxury automotive segment around the world, Porsche AG is one of the world’s most successful luxury automotive manufacturers.

On September 2022, I was excited with the initial public offering news and I reported the developments with Porsche IPO here in this blog. I was not alone in this euphoria and market conditions were just right for the action. In this article, we will look back the price development since the start of trading as well as volume and descriptive statistics. After that we will check the daily returns, categorical analysis of returns and see the comparative performance of the stock with the DAX Index.

This work does not contain fundamental analysis and valuation framework. The focus is on statistics and past performance. On the next article, I will also analyse the recent financial statements of the Porsche AG and complete this work with that dimensions, too.

1. Time Period, Price Developments and Beta

The time period in this study chosen from the IPO of Porsche AG shares, which was on October 03, 2022 to the latest closing prices on October 25, 2024. My source of raw data are through paid subscriptions to the Gurufocus, TradingView and Yahoo Finance. The number of observations is 518 and more than adequate for having reasonable outputs.

I have cleared the holidays and non-trading days from the raw data. Below, you see the closing price of Porsche AG on the left axis (blue) and DAX Index on the right (black). Through the midst of 2023 Porsche did have a better run than Index, and at the end of 2023 we have witnessed a discrepancy. Despite a recovery, the Porsche is underperforming in 2024. Since the IPO, DAX Index recorded a dazzling 62.85% return, but P911 was on the wrong lane with a 14.81% decline. On the right top corner, I’ve also attached highest and lowest daily returns, which we will elaborate later.

With the given return performance above, one might think that beta coefficient is negative and high. Therefore, I had conducted a regression analysis and results are on contrary. For the whole data period beta coefficient of Porsche is 1.0869 and this means a positive correlation. Based on this beta, a similar positive return would be expected. Therefore, I had run various checks for different time intervals, but it is still around 0.9572. In a nutshell, the shares had a good run with the market conditions and IPO tailwind, then a strong decline followed it with China story, recessions and weaker demand prospects.

Regression Beta for the Porsche AG

2. Statistics and Volume

Among these 518 object data set; the minimum price is 63.68 EUR and the highest price is 120.45 EUR. Based on closing prices, the average price in the analysis period was 92.24 EUR. Last closing price on October 25^th is 70.28 EUR, and this is 10% above the historical bottom. The highest drop in a day was recorded with 5.47% and the biggest gain in a day is 11.47. In this period mean daily return is minus 0.01% with a 1.86 standart deviation.

Descriptive Statistics

Dispersion of observations on the left side do not show a trend. Within the study period the minimum closing price is 65.00 EUR and maximum closing price is 120.35 EUR. Both the daily bottom (63.68) and peak (120.45) values are beyond closing prices. While the mean value is 92.24 the median stands slightly on the left with 91.16 EUR. We can say that latest closing price is far from all-time high (ATH) value and close to the deepest point. This interpretation leads to jump or recovery expectation, but we can not be sure that deepest point is left behind.

The average volume for Porsche AG is 502.535 shares per day. The highest volume was just after the IPO with 9.901.667 on October 12^th, 2022. Although the market lost the interest than, it is again gaining speed. It was often to see around 1 million shares trade in a day, in previous weeks.

3. Returns and Performance

As I have already above mentioned returns show a volatile pattern with a 1.86 standart deviation. The highest one day return is 11.47% and it is recorded on March 03^rd, 2024. As the recession and economic downturn pressures increase and China news weigh more the volatility increases in the returns, too. As the shares trade below IPO value market reacts to positive developments more enthusiastically.

Now let’s take the return analysis a step further and examine the breakdown of daily returns. With personally assigned percentage values, I have build an evaluation range. Half a percentage point changes in a day (on both ways) are insignificant and 1.5 percentage point increases and decreases are positive and negative. If the changes are within 2.0% and 4.5% I call those large. Finally above and below 4.5% values are bull run and bear sell off.

Classifying these returns based on magnitude reveals the following charts. Out of 518 trading days, returns were insignificant for 151 days, which is 29.15% of all time period. Following that positive (25.10%) and negative (24.71%) returns make almost the 80% of the data set. There were 7 bull runs and 5 bear sell offs in the study period.

When it comes to performance comparison, you see two charts below. On the upper section we are looking the scaled closing prices for DAX Index (red) and Porsche AG (green). The latest closing prices reveal that DAX Index provided a 60 percent return for a euro invested in it. On the other hand, one euro invested in Porsche AG stock incurred a 14 cent loss since the IPO. However there were periods, in which P911 outperformed the Index. This was until around midst of August 2023. After that the stock is consistently underperforming.

The chart below it is a histogram of returns for P911 and DAX. It is clear that Porsche was more volatile and offered huge returns and losses compared to Index. The 11% return in a day is lucrative but losing 6% in a day is also possible. I have prepared this study on weekend and on Monday, while I was writing on blog, the stock was more than 5% down.

To wrap up, I will present the standard deviation chart, which I also follow closely for my portfolio management decisions. Porsche AG started trading with a price of 82.50 EUR and gradually hit the +1 and +2 standart deviations approximately in 150 trading days. Than the -1 standard deviation acted as a jumping board. Return to the mean was the main scenario and successfully worked. However the retreat from there did not stop this time at the same point and we have seen a recovery around -2 standard deviation range. This region also covers the minimum and most recent values.

Maximum Drawdowns

Finally, here is another indicator that I monitor closely: Maximum Drawdowns. Since the IPO, Porsche shares recorded three big declines. First one was at the beginning of 2023, which was just within the correction and bear market territory, and rapidly moved to a new ATH from there. Second one was at the beginning of this year and from 72.12 EUR there was another huge comeback to 94.64 EUR within two months. Last drop is the maximum drawdown with 41.49% decline. From that point we also have witnessed a mini rally and on October 25^th, we were 36.74% below of the ATH value. I have also added a OHLC Price Chart to zoom in the last 5 months. There is a search for bottom around 66.80 EUR and the market conditions are not supportive to pass the 71.20 EUR resistance.

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Conclusion

Past performance is no guarantee of future results, but with these overall data I have acted on the market. For the transparency, I do have Porsche shares in my portfolio. The dim economic outlook and company guidance suggest that share price might be vulnerable to further sell off. Therefore risk and return preferences should be diligently managed.

As I have noted beta value suggest a co-movement with Index, but the outcome is the other way around. So never invest your valuable savings with just a couple of indicators or news. I have presented descriptive statistics for a period of almost two years since the IPO. The data point out an underperformance and there are two main reasons for that. Index is heavily led by tech and automotive sector is not doing good, and expectations are also not relieving.

Standard deviation chart show the fluctuations since the 03.10.2022 and the euphoria carried the price to highs. When it was replaced with anxiety we have seen the other side of the medallion. Current price look like over sold, but based on expectations further fall can not be dismissed from the considerations.

Financials have been disclosed last week, and I will analyse those in the next article. Broadly the outlook is not dazzling, but comparing the sell off in the market it can also be in the price. Therefore it is a very delicate situation and possible gains in the long run might turn to nightmares in the short run.

Ergun UNUTMAZ, 28.10.2024

For further reading and references:

Şişecam 2024/q2 Türkiye Şişe ve Cam Fabrikaları A.Ş. financials at the first half of the year.
Stock Analysis | MAVI.IS covers a similar study for a Turkish denim company.

Porsche AG Investor Relations is the official site for your inquiries, stock info and financials.

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