Escalating tensions!
Porsche AG, the renowned German automaker, is currently grappling with a downturn in its stock market today performance. The yearly lows at around 39 euros have emerged as an important support for Porsche stock, providing a potential opportunity for investors. However, the stock is presently running at the upper boundary of a trend channel, hinting at a downtrend.
In the second quarter, Porsche AG's operating profit dropped by 91% to 154 million euros, and revenue fell by 11% to 9.3 billion euros. Earnings per share (EPS) for the company shrank by 77% compared to the previous year, and the consensus for Porsche AG's EPS in 2025 is only 1.70 €, around one-third of the previous year's level.
These financial struggles have led to a major efficiency program announced by Porsche AG's management. The program includes the elimination of 3,900 jobs by 2029, withdrawal from cell production, and a flexible mix of combustion, hybrid, and electric models. Volkswagen AG, which holds a majority stake in Porsche AG, is the shareholder driving these measures, aiming to initiate a turnaround for the company.
Five out of six model ranges have already been renewed by Porsche AG. Despite these efforts, the main drivers for the poor second-quarter results were sales declines in China, new US tariffs, and billion-euro restructuring effects from battery production.
Analysts have varying views on Porsche AG, with some maintaining an 'overweight' rating and others downgrading their ratings. If the Porsche stock breaks the trend line to the downside, the yearly lows at about 39 euros could be the next realistic target. On the other hand, if the price stabilises at the support zone, a long opportunity could arise, although it would be against the overall downtrend.
It is possible that further pressure on the stock may come from funds or ETFs adjusting their holdings, leading to additional sales. The upcoming delisting of Porsche AG from the DAX on September 22 due to low free float and poor performance may also add to this pressure.
For those considering short positions, entering a position could be considered if the stock breaks the support zone to the downside or bounces off the old highs.
A link to the TradingView chart of Porsche stock can be found here. Given the delisting from the DAX, it is initially cautious about positioning and waiting for further developments.
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