Porsche AG (P911) stock analysis - They're not stepping on the gas -

Porsche AG (P911) stock analysis fundamentals, overview

Porsche AG, officially known as Dr. Ing. hc F. Porsche AG, is a German premium sports car manufacturer founded in 1931 by Ferdinand Porsche in Stuttgart. The company is still headquartered in Stuttgart-Zuffenhausen, where the iconic 911 model is also produced. Over the years, Porsche AG (P911) has become synonymous with performance, engineering precision and design, and is one of the most profitable car manufacturers in the world. Porsche AG (P911) employs more than 40000 people worldwide and has numerous subsidiaries, research and development centers and production facilities outside Germany, such as in Slovakia and Malaysia. It is also present in more than 100 countries with a sales network, offices, Porsche Centers and experience centers. The company is part of the Volkswagen Group, but has also operated partly independently since its listing.

The company went public on the Frankfurt Stock Exchange at the end of 2022, with 911 million shares. It is also listed as an ADR on the American stock exchange under the ticker $DRPRY (can be purchased for USD), in case someone needs this and wants to buy the paper not on a EUR basis. The parent company's stock identifier is $PAH3.DE

Marketcap: EUR 39.74 billion
Investor relations: https://investorrelations.porsche.com/en/
iO Charts stock page: P911.F stock page

📒Table of Contents📒

I have created a table of contents to make it easier for you to navigate the longer articles:

Specialties of Porsche AG (P911)
How does Porsche AG (P911) make money and what market advantages does it have?
Porsche AG (P911) metrics
Acquisitions of Porsche AG (P911)
Porsche AG (P911) management
Competitors: opponents of Porsche AG (P911)
What risks does Porsche AG (P911) run?
Valuation of Porsche AG (P911)
Major news and the last quarter
Other interesting facts about Porsche AG (P911)

〽️Market segment analysis〽️

In this section, I examine the dynamics of the market segment, how it operates, who the main players are, and what tailwinds or headwinds the players in the given market have to deal with. I will not analyze companies in depth, but I will touch on the market share of individual companies.

The automotive industry is typically a market that I am reluctant to invest in. The reason for this is due to poor fundamental characteristics:

⚠️brutal competition, countless companies have disappeared from the scene in the last 120 years
⚠️very complex sector with many problems (trade unions, recalls, scandals, political battles, etc.)
⚠️extremely complex products made up of many components (the second most complex consumer product after a private jet)
⚠️high, sunk costs (they produce an expensive and complex product, “capex heavy”)
⚠️recurring scandals, high risk of financial and prestige loss (Takata airbag scandal, VW diesel scandal, serial defects, etc.)
⚠️cyclical, tracks macroeconomic changes
⚠️Due to high competition, margins are low, capital burn is high, many manufacturers need state incentives
⚠️Companies at the forefront of environmental issues

📝In summary: cyclical, high capital cost market, with very high competition, this is not where monopolies tend to form. The main problem of the industry is that it cannot really generate surplus value on capital, which is well illustrated by the figures in the article. In addition, these companies are often subsidized along national interests - for example, the USA saved GM-Chrysler - which causes market distortions, and huge losses are not uncommon, which often erode brand value.

The above effects can be mitigated if you think of a car manufacturer not as a company producing finished products, but either as an innovative technology company (e.g. Tesla or BYD) or as a luxury product (Ferrari, Porsche, or non-listed companies such as Bentley, Bugatti, Lamborghini, etc.).

💡In the case of a luxury product, the main goal is not to get from point A to point B, but rather to possess, to prestige, to experience the car, to feel the life, to heritage, and similar more abstract concepts. These are concepts that are difficult to measure and that are built into the price of the product as a lot of extra profit.

For this reason, it is worth knowing which company roughly falls into which segment of the automotive industry:

🚗consumer manufacturers: Opel, VW group (Seat, Skoda, VolksWagen, etc.), Stellantis group (Renault, Peugeot, etc.), Fiat and so on
🚗premium manufacturers: BMW, Lexus (Toyota), Audi (VW), Mercedes, Infinity (Nissan), Volvo (Chinese)
🚗premium technology manufacturers: Tesla (where a significant part of the revenue comes not from the car, but from technology or other services, e.g. CO2 quotas), BYD, etc.
🏎️between luxury and premium manufacturers: Porsche AG (VW), Maserati
🏎️luxury manufacturers: Ferrari, other non-listed companies: Lamborghini (VW), Aston Martin, McLaren, Bugatti (VW), Bentley (VW), Maybach (Mercedes)

The alt attribute for the image is empty; the filename is Porsche-AG-resvenyelenzes-v2-1024x604.png — source: Autopunditz

First, how to decide which category a car manufacturer falls into:

❓What are the profit margins?
❓How much does an average car cost (this pre-filters the customer base)❓
❓Is there a history and automotive heritage that goes back many years?❓
❓How cyclical is demand❓
❓Are there any discounts on your cars❓ (there are none in the luxury category)
❓Can they artificially maintain excess demand?❓

First, it is worth starting from the average model quantity and average price to select the relevant manufacturers (based on 2024 data):

BMW: 2.3 million cars and 80 thousand EUR (58 thousand EUR according to MS*)
Porsche: 310 thousand cars and 130 thousand EUR (only 2021 thousand cars were sold in 270), according to MS (120 thousand EUR)
Classic Ferrari for sale: 13 thousand cars and 300 thousand EUR (385 thousand EUR according to MS)
Lamborghini: 10 thousand cars in 2023

* Based on Morningstar analysis

💡Interesting fact: the world's most expensive car ever sold is a Ferrari 250 GTO (70 million USD), the second is a Mercedes-Benz 300 SLR Uhlenhault (42 million USD) and the third is a Porsche 917K (14 million USD).

Let's see what the profit margins and profit per model look like (2022 data, unfortunately the current situation is significantly worse, as you will see below):

VolksWagen (VVAGY): 8.2% and 1757 EUR
BMW (BMW.GR): 9.2% and 3057 EUR
Daimler AG, (Mercedes, MB.GAF): 8.7% and 3357 EUR
Porsche AG, (P911, PAH3.DE): 18.4% and 16780 EUR
Ferrari (RACE): 24.6% and 68987 EUR

This is more of an interesting fact, but there is also a picture of the profitability of traditional car manufacturers from the Fundsmith fund (which is the fund of one of the most well-known English investors, Terry Smith):

Funsmith presentation, return on capital achieved by car manufacturers — source: Fundsmith

As you can see, Ferrari stands out from the other manufacturers by far, but Porsche AG (P911) also sticks out from the premium segment, scratching the bottom of luxury. There is also another interesting dynamic that affects the price of used cars: logically, the price should decrease in direct proportion to use in the long term, but Ferraris in particular – but also Porsche 911 models – behave like artifacts and increase in value. This is a general trend for these manufacturers, while in the case of other car brands, apart from one iconic model – e.g. Honda NSX, which beat the Ferrari 348 at the time – they lose their value until they wear out.

☝️Before anyone misunderstands, except for most Ferrari models these rather exceptions and they don't just depend on the brand name. For example, the depreciation of a Porsche Cayenne SUV or a Taycan is significant, while the limited Porsche 911 models are so oversubscribed that not everyone interested gets them, meaning they are worth more as soon as they leave the factory.

Ferrari is one of the brands in the world whose models are constantly in over-demand. This means that there is a demand pressure, the market would like to buy more Ferraris, but the manufacturer deliberately does not satisfy this demand, maintaining exclusivity. There are no discounts for Ferraris (not even for Porsches), and they do not have cheap models, but there is a 2-year waiting list for them. In addition, many Ferraris end up with people who already have a Ferrari - ultra-high-net-worth individuals (UHNWIs), i.e. those with a fortune exceeding 30 million USD. However, for 60% of buyers, their first Ferrari is the car they have purchased, which shows that the wealthy segment is constantly growing. Some limited edition models sell for up to 1-2 million USD, even before they are released.

In contrast, the price of Porsche AG (P911) models is lower - and the volume is much larger, about 25x - but there are special editions that sell for much more than the average price of 130 thousand EUR (300-500 thousand EUR). In other words, Porsche balances somewhere on the threshold of the premium and luxury categories.

Ferrari margins and profit — source: left: Reddit, right: Fiatgroupworld

In the image above, on the left, you can see the 2023 operating margin, with Ferrari leading by a towering XNUMX%. Porsche AG (P911) is far behind in second place, while on the right you can see that 5.2 Porsches need to be sold on average for the manufacturer to realize the profit made on 1 Ferrari. There are as many ideas in this regard as there are sources, as many different numbers, but everywhere they write a four-five-fold multiplier, so I don't think this is unrealistic (in the first calculation the difference is 4.1x, but the exact number is not important, but the order of magnitude).

Another sign of luxury is that luxury car manufacturing companies have a tradition that can be traced back many years – heritage -, which is at least as strong in the case of Porsche AG (P911) as it is in the case of Ferrari. An astonishingly high number of Porsche models are kept alive, many companies make conversions – e.g. Ruf, Singer, etc. -, while this is almost forbidden in the case of Ferrari, and the cult surrounding both car manufacturers is amazing.

Porsche Museum, Stuttgart — source: Porsche Museum website

I have flipped through several books about the company – and I am planning to go to Porsche this year (Stuttgart) and Ferrari (Maranello) to a museum - and it is clear that there is a clearly visible logic that they carry through and stick to even when the market does otherwise (e.g. 911 rear engine, air cooling until the end of the 90s, since then water cooling, but still rear engine). Porsche is one of the sports car brands whose models can be taken out of the showroom and taken to the racetrack, or can be driven in everyday conditions (with compromises, of course). Porsche is also called the everyday sports car. Both Porsche and Ferrari have a program where they track and validate their cars, so these cars have a big veteran cult. There is also the factory Special request program, based on which Porsche Exclusive Manufaktur and Porsche Classic customize customer cars to the special needs of customers.

Number of Le Mans victories — source: Substack, The Dutch Investor, number of Le Mans victories

💡It is also worth talking about racing. Porsche was primarily successful in endurance races - e.g. Le Mans 24 Hours - while Ferrari was more successful in Formula 1 for decades, which also contributed to the development of the brand's heritage.

Also recommended to read Lars Tvede - Supertrends: Winning Investment Strategies for the Coming Decades which deals with luxury industry trends.

🙋‍♂️Porsche AG (P911) Specialties🙋‍♂️

In this section, I examine what specialties the analyzed company has, what its position is in the market, and whether it does anything differently than its competitors. If so, what and how, and what impact does this have on their operations.

Porsche, unsurprisingly, makes its money primarily from car sales, with the remaining roughly 8% being financial services. Why is Porsche AG able to sell its cars (P911) more expensive than other manufacturers? Actually, I already explained it above, but let's summarize the gist:

💡trendy models: now they have many models that can replace the first car: SUVs, limousines (Macan, Cayenne, Panamera)
💡heritage: a past that is difficult, almost impossible to reproduce
💡economies of scale: Porsche produces in fairly large volumes, shares development costs with VW
💡high price, relatively high profit
💡sports car cult: can also be used in everyday life, although it is almost always bought as a second car (or third in richer countries)

Brand loyalty is so strong that 58% of customers buy a Porsche because they know it's a Porsche. Porsche cars are kept the longest, with a total dropout rate of 7%, which is extremely low for car manufacturers. As for product quality, and this obviously contributes to loyalty, one of the most shocking figures is that two-thirds of Porsches produced since 1948! are still on the roads. This has led to a fairly large secondary market, in which the brand is also actively involved (it is worth producing parts for it, and even the Porsche classic (There are also decorative wheel caps available within the scope of the package.) This means two more things:

The quality is outstanding and their cars are hard to wear out
the brand is consistently popular, even the old models are cult items

JDPower measures owner satisfaction every year. Porsche has been in the Top 2003 in all 20 reports since 5. And the brand came in first place seventeen times. In light of this, the continuously increasing pricing power is not so surprising:

I don't think I'm wrong to say that Porsche owners are fanatically fond of their cars and see them not only as an object responsible for moving around, but also as a kind of source of pleasure. It is very important that these people separate the concepts of driving a car and moving from point A to point B.Basically, owning a Porsche is a hedonistic pleasure, especially considering their sports cars, but their models designed for everyday use have also retained their sporty character, compared to their category. In other words, driving a Porsche is associated with pleasure, even if the real goal is to move from point A to point B.

They often use the term “religion stock” for stocks, but the same can be said for cars, and Porsche has this kind of love surrounding the brand. And this creates an emotional addiction for Porsche car owners that is not to be underestimated.

💰How does Porsche AG (P911) make money and what market advantages does it have?💰

In this section, we examine what exactly the company does, how it generates revenue, what products and services it has, how indispensable they are. Does it have any competitive advantage (economic moat), how defensible it is, and whether the trend is decreasing or increasing, and what is likely to happen in the long term.

It is worth looking at the breakdown of Porsche AG (P911)'s revenue and the territorial distribution (based on 2024 data):

sports cars: 24% – Cayman/Boxster: 23670 cars, 911: 50941 cars (total: 74611 cars)
limousines: 16% – Panamera: 29587 cars, Taycan: 20836 cars (total: 50423 cars)
SUVs: 60% – Cayenne: 102889 cars, Macan 82795 cars (total: 185684 cars)
Altogether: 310718 cars

Porsche AG (P911) vehicle sales by model — source: Finchat.io, Porsche AG (P911) car sales by model

As you can see, sports cars are no longer dominant, meaning that although the brand has retained its sporty traditions, it has moved with the trends and put SUVs at the forefront. 92% of revenue comes from cars, 8% from financial services (financing and the like). Territorially, the main markets of Porsche AG (P911) are the following:

Europe: 23.75%; (EUR 9.5 billion, minus Germany)
Germany: 13% (5.2 billion EUR)
Cinchona: 15.75% (6.3 billion EUR)
North America: 32.25% (12.9 billion EUR)
Other areas: 15.25% (6.1 billion EUR)

Porsche AG (P911) revenue breakdown — source: Gurufocus

The most expensive models among cars are found in the 911 series, the new hybrid model was introduced at the end of last year, its starting price is 181400 EUR, the more exclusive models are even more expensive. The starting prices are as follows (2024):

911: 181400 EUR
Cayenne, 718 Boxster: 108200 EUR
Panamera: 158700 EUR
Taycan: 98600 EUR, electronic
Cayenne: 158400 EUR
Macan: 88900 EUR (electronic), 125700 EUR (petrol), electric introduced in 2024

source: Finchat.io, Porsche AG (P911) vehicle sales by region

All of their models, except for the Cayenne, are manufactured in Germany, which is also a kind of image-building element.

🏰Economic moat🏰

In this segment, I examined whether the company has any economic competitive advantage, which Warren Buffett referred to as the “economic moat,” which prevents competitors from besieging the company’s fortress, i.e. its business, and taking its market. In the case of Porsche AG (P911), these could be the following:

🫸Cost/scale advantage: It used to be, but other players in the market (especially emerging Chinese competitors) have also grown incredibly fast and big. The question here is whether VW, as a group that owns a significant share of Porsche AG (P911), has an economy of scale advantage. I think it does, but it is certainly not as strong as it was a few years ago, when Toyota and VW were constantly alternating between being the top 2 largest car manufacturers.
🫸Switching cost: yes, because 58% of buyers who want to buy a Porsche buy that sports car model because it is a Porsche. The attrition rate, as I wrote earlier, is only 7%, so most Porsche owners stick with the brand for decades. Although I wouldn't call this a switching cost (there is nothing stopping owners from choosing a model from another brand), buyers still don't switch.
🫸Network effect: none.
🫸Intangible assets, know-how, trademark: yes, the Porsche heritage itself and the feeling of life that comes with the car. Porsche engineers have also accumulated a significant knowledge base in the gasoline car market, but we could mention the refinement of the rear-engine drive to the extreme in the 911 models. Where I think it is lacking is in electric cars, where Chinese competitors seem to be serious opponents compared to European or other Far Eastern manufacturers.
🫸Barriers to entry: the industry is capital-intensive, but the entry barrier itself is not high, especially since states often subsidize manufacturers. What is difficult to acquire, however, is heritage and very high brand prestige, as this only develops over decades. Think of the stereotypes: Toyota=reliable, BMW=sporty, Rolls-Royce=luxury, Tesla=technology, etc., the labels that separate individual brands could be listed endlessly.

Based on the above and the difficulties detailed below, Porsche's economic competitive advantage has been questioned, to put it mildly, in the last few years, one of the reasons being the rapid electrification and the repositioning of car manufacturers as technology manufacturers. This is also reflected in the metrics of Porsche AG (P911), but it is also true that Porsches are primarily bought by those who want a Porsche. And the buyer does not get this feeling of life from an average, non-premium manufacturer, but the new generation is not necessarily looking for this either. I feel that Porsche is a slightly weaker company than Ferrari, but it still has a narrow moat, in line with what the Morningstar analysis states.

🎢Porsche AG (P911) metrics🎢

In this section, I examined what metrics characterize the company, how it stands on the revenue side, what margins it operates with, whether it has debt, what the balance sheet shows. I look for items that are challenging - too high debt, high goodwill, etc. - what return on capital the company is working with, what its cost of capital is, how the revenue and cost sides are structured. I also examine trends, owner value creation, and what the company uses the cash it generates.

As in previous analyses, I used the usual metrics here, except that I also included a few other car manufacturers (BMW, Mercedes, Tesla, Ferrari) for comparison. Before I get into that, let me talk a little about Porsche's fundamental problem as a brand.

💡I read a very apt sentence about Porsche in an article: the car manufacturer stuck between two worldsPorsche is still the king among gasoline sports car manufacturers, but this market is shrinking and losing ground to electric cars, where traditional values – sound, the feeling of owning a Porsche, performance, driving experience, etc. – cannot prevail.

Consumers' choice of engine for passenger cars — source: Clean Technica, preferred engine types by region

💡Electric driving is simply a different world, with different rules (technology, services, AI, camera systems, software extras, etc.). and perhaps more importantly: with a different customer base, who expect different things from a car. The problem is that Porsche cannot position itself as a luxury car manufacturer in this world for the time being. Currently, electric car prices are constantly falling, so the competition and loss of value are brutally high. The engine accounts for 20% of the total cost of a gasoline car, while in the case of an electric car, the battery and drivetrain are responsible for roughly 40% of the costs. Since battery technology is largely in the hands of China and South Korea, and innovation is incredibly fast - much faster than in the case of gasoline cars -, the value of older electric cars is constantly falling. It is no coincidence that there are so many price cuts that a company balancing on the edge of the premium/luxury segment cannot afford (e.g. there are no Porsches and Ferraris on sale). In this way, models like the Porsche Taycan simply do not sell, because buyers are not willing to pay the significant premium for it.

source: Finchat.io, Porsche AG (P911) quarterly revenue trend

Let's start, as usual, with the revenue that caused the Porsche AG share price to fall in recent months: the drastic drop in Chinese sales. In terms of numbers, this looks like this, if we look at it year-on-year, "there's nothing to see here" (percentages compared to the previous year):

2018: EUR 25.7 billion
2019: EUR 28.5 billion (+10.6%)
2020: EUR 28.7 billion (+0.6%)
2021: EUR 33.1 billion (+15.5%)
2022: EUR 37.6 billion (+13.6%)
2023: EUR 40.5 billion (+7.7%)
2024: EUR 40.1 billion (-1.1%)

However, if we break it down by quarter, the picture is not so rosy (percentages compared to the previous year's quarter):

2024 Q1 (March): EUR 9.01 billion (-10.8%)
2024 Q2 (June): EUR 10.4 billion (+1.1%)
2024 Q3 (June): EUR 9.1 billion (-6.1%)
2024 Q4 (December): EUR 11.5 billion (+10.8%, new models launched)
2025 Q1 (March): EUR 8.2 billion (-9%, estimate only, data to be published on April 29)

Why are sales falling? To understand this, you have to understand that in Europe, gasoline and diesel engines have a long tradition, but in China, the domestic car market was practically built from scratch and brutal infrastructure developments were implemented, so it was not difficult to bring electric cars to the forefront.

source: Finchat.io, Porsche AG (P911) car sales excluding China and rest of the world

Moreover, China does not have such a long tradition of gasoline-powered cars, and the population is much more receptive to domestic brands – BYD, Xiaomi, Geely, MG, NIO, etc. – which are already large enough in terms of economies of scale to be competitive in export markets, not to mention state subsidies. The 2024 volumes of some Chinese automakers:

BYD Auto: 3.65 million vehicles, of which 1.14 million for export (BYD)
Geely Auto Group: 3.33 million vehicles, of which 2.17 million under the Geely Auto brand (Geely, Zeekr, Lync&Co, Proton, Volvo)
Chery Automotive: 2.6 million vehicles (Omoda, Jaecoo brands)
SAIC engine: approximately 4 million vehicles, of which 929 thousand vehicles for export

Porsche AG (P911) car sales, China and rest of the world — source: Finchat.io, Porsche AG (P911) car sales, China and the rest of the world

In fact, these car manufacturers are not competing with Porsche AG in the gasoline-engined market - Porsche does not produce diesel - but in the electric car market, where Porsche does not have a particularly large technological advantage - every Chinese company can already produce powerful, fast, but heavy electric cars - so it is only worth following the sales of electric models. Porsche AG (P911) has an exclusively electric model called the Porsche Taycan, but in the case of new model series, the electric Porsche Macan is also one, and new, electrified models are coming out one after another, but perhaps late.

source: Finchat.io, Porsche AG (P911) Taycan and Macan sales

The picture shows the spectacular decline in Taycan numbers. The volume practically fell by a third. Of course, Porsche AG (P911) doesn't live off the Taycan, but it's not a success story, but sales of the new electric Macan have skyrocketed. It was introduced in May 2024, but the jump in Q4 is visible as production ramps up.

How big is the problem? Porsche AG (P911) had a revenue of EUR 40.1 billion in 2024, of which the Chinese market accounted for 15.7%, which is roughly EUR 6.3 billion. This is not a small amount, but its decline does not ruin Porsche AG (P911). Rather, it highlights a trend that suggests a decline in the automaker's competitive advantage and a deterioration in its margins. Unfortunately, it does not just suggest it, as the figures show two things:

almost all margin indicators have fallen in the last few quarters
the previously relatively wide net profit margin seems to be narrowing sharply: Ferrari 20-22%; Porsche: from 13-15% to 6-7%; Tesla: 8-9%

source: Finchat.io, Porsche AG (P911) margin indicators

In the picture above, it is worth paying attention to the averages, the drop in Q2024 3 was caused by the launch of new models last year, and it seems that margins are starting to approach the previous average. However, the profit margin has flattened, at 7.2%, it is roughly half of what it was before. The following picture shows the margins of other European premium manufacturers, Ferrari as a luxury manufacturer and Tesla as a company that calls itself a technology manufacturer:

source: Finchat.io, Porsche AG (P911) car manufacturers' margin indicators

In connection with the above, the thought occurred to me that the 5-7% margins of the previous, so-called premium car manufacturers - BMW, Mercedes, Audi - were consistently beaten by Porsche AG with its 13-15% margins - there is no previous data because Porsche AG's IPO was on 2022.09.29 - just as Ferrari has beaten all other car manufacturers for which there is stock market data. This advantage currently seems to be lost. Although it should also be noted that BMW's 4.1% and Mercedes' roughly 6.5% profit margins are not exactly outstanding, their metrics have been around this level before.

Let's look at the value creation indicators, as this still allows the company to properly manage the cash it generates. Unfortunately, car manufacturers are cyclical companies with high sunk costs - they produce finished products, which are expensive, and have a lot of fixed costs - so they cannot be expected to have as high a return on capital as a service provider or software company with low fixed costs.

🧮What do ROIC and ROCE metrics show?🧮

ROIC (Return on Invested Capital): Shows how efficiently the company uses its total invested capital to generate profit. Read more here.

It shows the company's fundamental value creation capability.
It filters out the impact of the financing structure.
If ROIC exceeds the cost of capital (WACC), the company is creating value.

ROCE (Return on Capital Employed): Shows how efficiently the company uses its long-term financing sources. Read more here.

It measures the profitability of business activities.
It does not take into account tax effects.
A good basis for comparison between different industry players.

ROCE/ROIC values were brutal in the first 1-2 years after COVID – ROIC 27-30%, ROCE around 20% - meaning the return on invested capital and working capital was huge. The weighted average cost of capital (WACC) is 7.4%, if the ROIC is higher than this, then the company is creating value. This is not a company with a low fixed cost structure like the software companies analyzed earlier – for example Adobe Inc. (ADBE) or the Computer Modeling Group (TSX:CMG), but the trend is still worrying. Since Q2023 1, there has been a strong downward trend in all three indicators, which does not bode well for the company's situation and it is not yet clear how this will turn around, see management reactions below.

source: Finchat.io, Porsche AG (P911) value creation indicators

💡As I have repeatedly emphasized, the internal value creation of companies is what is important, and this was prominent in the past in the case of Porsche AG (P911), but this seems to have changed in the last few quarters. However, Porsche was in a similar situation in the mid-90s when it almost went bankrupt, but the company survived. Then the cheap models - Boxster - and later the SUVs - Cayenne - saved the company.

Porsche AG (P911) owner value creatione

On the owner value side, I usually look at how the company uses the free cash generated. Basically, a company can do the following with cash:

funnel it back into the business
reduce debt (2.18 billion EUR)
pays dividends (pays a 4.4% dividend at a price of EUR 44)
buys back shares
acquires other companies (see VW-Porsche acquisition below)

Porsche AG (P911) spends significant amounts on research and development, without which it would not be able to maintain its competitive advantage. In 2024, it spent EUR 2.528 billion on developments, half of which was spent on the electric transition. The same value was EUR 2.834 billion in 2023, meaning that the ratio of research and development to revenue was 6.9% and 7.6% in the last two years. The electric transition will probably consume even more money in the future, but at least the company is investing it in forward-looking developments.

Porsche AG (P911), like most car manufacturers, has some debt, which currently amounts to a net EUR 2.18 billion:

total debt: EUR 11.3 billion
cash: EUR 9.1 billion
net debt: ~2.2 billion EUR

However, they also sit on a significant amount of cash – or financial assets equivalent to it – of EUR 9.1 billion. When you compare the amount of net debt to revenue – EUR 40 billion – or cash generated – around EUR 4 billion – it is still very low. Instead, it pays out a significant portion of its cash as dividends, as you can see below.

source: Finchat.io, Porsche AG (P911) debt

Porsche AG (P911) is a dividend paying company, and at the current price of EUR 44, it pays a dividend of 4.4%, which is EUR 2.31 per share. I am not a big fan of the fact that the majority of the return comes from dividends, but the increased dividend yield is also a result of the share price drop. The payout ratio is 58.6%, or about EUR 2.4 billion. European companies are traditionally less committed to dividends, meaning they are more willing to cut than American companies, where there is a greater tradition of protecting dividends (just think of the case of Exxon (XOM), which, despite negative earnings, covered its dividends with debt at the beginning of COVID). Porsche AG (P911) can be considered conservative in this respect, since the According to Reuters In March 2025, they cut their forecasts by a third, but the dividend will continue to be maintained.

A magyar investors for: there is no 30% withholding tax on European stock exchanges, as there is on American stocks, and you have to declare it at home. Except, If you buy the stock into a TBSZ account, you don't have to pay taxes on the dividends.

Porsche AG (P911) has not bought back its own shares since the IPO, although an opportunistic share purchase would be logical at the current price of EUR 44.

💵Porsche AG (P911) Acquisitions💵

In this section, I examine how acquisitive the nature of the company is and what impact each acquisition had on the life of the company, if any.

There is actually only one acquisition that can be mentioned, but it turned out to be a rather complicated story. This is the Porsche-VW acquisition, which went wrong for Porsche AG (P911), as VW ended up buying Porsche. To understand this, we have to go back to the 1940s. Porsche Ferdinand Porsche founded in 1931, then as an engineering design office. He was the one who designed the VolksWagen Beetle in 1934. He had two children, his son Ferdinand (Ferry) Anton Ernst Porsche and his sister Louise Porsche, who was five years older than him and was the mother of the future VW boss Ferdinand Piëch. Anton Piëch was Ferdinand Porsche's son-in-law, so we should actually be talking about the Porsche-Piëch family. The full family tree you can watch it here.

The rivalry between VW and Porsche began in the 1960s, when VW acquired a minority stake in Porsche. From 1959 onwards, the 914/924 models were produced by VW, and later the 944 by Audi. By 1972, this had grown to majority ownership, but Porsche's independence remained. In the 1990s, Porsche also began buying VW shares.

💡In October 2005, Porsche acquired an 18.53% stake in the factory, which it increased to 2006% in July 25 and 30.9% at the end of the same year, which was transferred to Porsche Holding SE. However, this required Porsche to take out a loan to acquire enough shares to become a majority owner. In 2007, Porsche SE launched a hostile takeover bid against VW, increasing its stake to 2008% in 43. In October 2008, Porsche announced that it would acquire 75% of VW, which pushed up the share price.

They decided on a quantity of around 75% because in 1960 In the Volkswagen Act, the state designated VW as a particularly important manufacturer and thus required an 80% stake in the company to acquire majority ownership.. At the same time, in 1960, the state bought itself into the company with 20.2%. Due to Porsche's takeover announcement, the EU and German authorities began investigating the case, and the takeover was stopped. In the 2009 crisis, Porsche's revenues fell by 83%, so it was unable to complete the takeover, and its debt ballooned enormously. In 2012, VW paid off Porsche's debt and also absorbed Porsche AG (P911).

In October 2022, Porsche AG (P911) was listed on the German stock exchange as an independent company, and its shares have been available for purchase since then. The result of the above acquisitions is a rather complex ownership structure, with Porsche Holding SE owning part of VW AG, which owns Porsche AG (P911), part of which has been listed on the stock exchange.

The complicated ownership of Porsche AG and VW — source: Substack, The Dutch Investor

This means that Porsche Holding SE – owned by the Porsche family – and VW AG own the majority of the shares, with roughly 25% being free float, which is what investors can buy.

It is also worth mentioning that Porsche AG (P911) also has minority ownership in 3 other companies:

Bertrandt: German consulting company, 29% owned by Porsche
bugatti rimac: 45% owned by Porsche and 55% by Rimac Group, produces sports cars, they want to enter the market with Bugatti in the next decade.
Rimac Group: Bugatti is the parent company of Rimac, with a 55% ownership stake, and is primarily involved in development. Porsche owns 21%, sharing experience with Porsche.
V4Smart – 2025.03: Porsche acquired the majority stake in V4Drive, a company that produces battery solutions called Booster Cells, which was owned by Varta AG – which remained a minority shareholder – and renamed it V4Smart. These cells are already used in the Porsche 911 GTS models (this represented EUR 800 million of the already announced EUR 200 million development).

Despite the above, Porsche cannot be called a company that prioritizes acquisitions at all; these are more like "professional collaborations" where joint technical developments are eventually incorporated into cars.

🤵Porsche AG (P911) management🤵

In this section, I examine who runs the company and how. What is the bonus system, how much risk – skin in the game – do the managers take on while running the company? Is there a family connection, or perhaps a special “heritage” factor?

The CEO position is particularly interesting, as the CEO of both VW and Porsche is held by Oliver Blume, and Ferry Porsche, the founder's great-grandson, is also on the board. The most important management officials are:

Oliver Blume – the combined CEO of VW and Porsche, has held the position since 2015, previously at Audi (from 1994), then at the Seat and VW brands in the production area. Between 2009 and 2013, he was head of VW production. Since 2013, he has been a member of the Porsche management board, and since 2022, he has also been CEO of VW. He owns 31 shares, worth EUR 101 million. I think this is a bit much at this level, his annual salary is more than the value of the share package he owns.
Andreas Haffner – HR manager, has been with the company for 9.5 years
Albrecht Reimold – manager responsible for production and logistics, has been with the company for 9.3 years
Dr. Jochen Breckner – 2025.02☝️, he holds the position of Head of IT and Finance, replacing Lutz Meschke, who was CFO and CO-CEO for 9 years and Deputy Managing Director at Porsche (he and Oliver Blume also answer questions in the quarterly reports).
Matthias Becker – 2025.02☝️, sales and marketing manager, responsible for overseas operations since 2015.
Dr. Wolfgang Heinz Porsche – Member of the Supervisory Board since 2009. Youngest son of Ferry Porsche, Chairman of the Board (his brother Butzi designed the 911)
Ferdinand (Ferry) Porsche – great-grandson of founder Ferdinand and holds a position as a member of the supervisory board.
Dr. Hans Michel Piëch – Member of the supervisory board since 2009, son of Anton Piëch.

It is significant that in February 2025, two top executives, Lutz Meschke and Detlev von Platen (Porsche's head of sales), were replaced. Lutz Meschke's crime was allegedly to go against the views of Oliver Blume, who was a staunch supporter of electrification, while Meschke fought against him. Detlev von Platen fell victim to the decline in Chinese sales, so it is clear that Porsche AG (P911) was also pushing for changes in management.

Of course, other names have also come up, but here are some without claiming to be exhaustive:

future CFO: Holger Peters (Skoda), Jürgen Rittersburger (Audi)
future sales director: Martin Sander (VW), Alexander Pollich (Porsche)

There is also ongoing talk that Oliver Blume should not be the CEO of VW and Porsche at the same time, so there is also a chance that he will resign from the leadership position of one of the companies (this is also mentioned in the 2024 Q4 report) and in this case it would be logical to look for someone to lead Porsche. The options:

Klaus Zellmer (Skoda)
Stefan Weckbach (VW)
Peter Bosch (CARIAD, VW's technology division)

source: Simply Wall St., Porsche AG (P911) executive compensation

Regarding the incentive system:

basic salary: 30-45% of annual compensation, this is the amount that represents traditional salary, paid as a monthly allowance, "in cash".
short-term incentives (STI): things tied to achieving targets, also paid in "cash".
- Achieving ROI (return on investment, weighted 50%): target: 24%
- Accessing ROS (return on sales, weighted at 50%): 15%
- ESG target (multiplier bonus for the above): I think due to the drive for lower CO2 emissions from cars, about 20-30% of the annual package.
long-term incentives (LTI): the usual stock option, must be held for 4 years and can be converted into cash if EPS increases by 100%

Overall, I think it's completely fine, they really tied the compensation to the company's progress. They're not earning much these days, because I don't think the targets were met.

It is also important to note that the 911 million shares floated represent approximately 24.2% of the company. The remaining shares, i.e. the majority ownership of Volkswagen Group AG (31.9% of the subscribed capital and 53.3% of the ordinary shares), are held by Porsche SE, while Porsche SE is controlled by the Porsche-Piëch family. In addition, Porsche SE owns 12.5% of the shares in Dr. Ing. hc F. Porsche AG, and a further 2.5% is held by the Qatar Investment Authority (as of March 2024). This means that the founding families remain the majority owners of the company (source: Porsche).

I've listened to a few Q reports, and they all emphasize that they want to spend most of the cash on innovation and the development of new models, and the reduction of fixed costs is also mentioned several times. In fact, they communicate this consistently, which is positive from the management side.

🆚Competitors: Porsche AG (P911) opponents🆚

In this section, I examine who the competitors of the analyzed company are, what is their market position, whether they are subordinate, secondary or superior. What is their market share and what is their specialty? Are they gaining or losing market share to their competitors?

Porsche's competitors are difficult to gather because relatively few sports car manufacturers are listed on the stock exchange. I mentioned Ferrari (RACE) earlier, for which there is data, but Bugatti (VW-owned), McLaren, Bentley (VW-owned), Lamborghini (VW-owned), Maserati (Stellantis Group), Aston Martin, and many other supercar manufacturers are private companies. According to the descriptions, Porsche is closest to Maserati in prestige, the BMW/Mercedes/Audi trio is ranked below, and the Lamborghini, Ferrari, Aston Martin trio is ranked above in prestige. Since I wasn't sure I had all the important manufacturers in mind, I looked at what Morningstar had to say about the competitors. Pretty much nothing, except Ferrari.

Porsche AG's opponents according to Morningstar — source: Morningstar, competitors of Porsche AG (P911)

I tried to formulate which of the listed companies – Porsche and Ferrari – has the advantage or disadvantage from an investor's perspective:

Pro: Porsche vs. Ferrari

higher production volume, lower costs (VW background, which has come in handy many times in history)
more durable product (a very significant percentage of Porsches are on the roads)
currently much better valuation (but metrics are also worse)
the concern has a higher chance of bailing it out (but VW can also pull it back if it is in trouble)

Kontra: Porsche vs. Ferrari

much better metrics (best compared to all manufacturers)
exclusivity (closer to super-luxury)
greater excess demand (artificial undersupply)
less sensitive to economic crises (customers with very high wealth are less affected by economic recession)

To be honest, I haven't found many metrics where Ferrari doesn't beat Porsche to the punch, simply because the former is part of the super-luxury category. The supply is significantly tighter, the over-demand is very high, the price is much higher, and therefore the buyer base is different (except for special edition 911s, which are priced similarly). However, Ferrari shares are almost always trading at a terribly high valuation, which is why it is very rare to buy one in a way that can realize a meaningful return on the investment.

⚡What risks does Porsche AG (P911) run?⚡

In this section, I examine all the risks that could affect the company's long-term future. Currency, regulatory, market disruption, and so on.

I did my first Porsche analysis last year, and the world has changed a lot since then, and I think a lot of skeletons have come out of the closet. In addition, Donald Trump has taken office, and since Porsche manufactures finished products, any tariffs imposed on European car manufacturers will definitely affect the company. From this perspective, I think Ferrari is in a better position, because in the super luxury category they are more likely to pay this premium, while in the case of Porsche this will probably only be true for the expensive and special 911 models. But let's look at the risks one by one.

🛃Tariff War🛃

As it stands, the tariffs have been suspended for 90 days by Donald Trump, but if they go into effect on the automotive industry, all Porsche models will be subject to a 25% tariff, as they are not assembled in the US. The image below shows the percentage of vehicles assembled in the US by each manufacturer:

Porsche management said that this additional cost will be passed on to customers in full, meaning that Porsche models will be more expensive in the US. Based on the previous data that Porsche AG (P911) generates 32.25% of its revenue – worth EUR 12.9 billion – in the US, this will likely reduce sales and cash generation. In reality, Porsche AG (P911) will not benefit from the higher price, because it will be absorbed by the state, but it is likely that fewer cars will be sold, which will result in a direct decrease in revenue.

📉Economic recession📉

In fact, we are in the middle of an economic recession, exacerbated by factors such as the tariff war and the weakness of the Chinese market. Theoretically, the very high-income class is more resilient to such problems, and it is typically these people who buy the products of luxury and super-luxury manufacturers, such as Porsche and Ferrari.

source: Youtube, Supercharged Panda, I think I can see some similarities between the two cars

As for the weakness in China, management expects that demand in China will not return to previous levels in the short term, because they would be able to compete in this market with their electric cars. However, this is a very competitive environment, and you can find a lot of cars with many different designs on the Chinese market. When I saw the new Xiaomi SU7, the Taycan jumped in right away, and even from that there is an Ultra model, which most closely resembles the Taycan Turbo (the 2024 Q4 report even calls Xiaomi a “copycat”). Which one sells better in China? The latest data I found is that there is a 7-36 week waiting list for the Xiaomi SU43 Pro model, it costs 246 thousand yuan in China, which is about 35 thousand USD, and customers are waiting for about 150 thousand cars to be delivered. How much does a Porsche Taycan cost? 918 thousand yuan, which is equivalent to 126 thousand USD, or about 3.6 times more expensive than the Xiaomi product, so sales fell by a third in the case of the Taycan.

🪫Electrification🪫

It has now been proven that forced electrification has not really worked, even though a huge amount of state support has been poured into the sector. Back in 2022, Porsche AG (P911) declared the “Road to 20” plan, the essence of which was that by 2030 80% of Porsche cars would be electric, and that they would achieve a 20% Return on Sales. Let’s face it, this is not very likely to happen in the next few years, Porsche is light years away from the numbers it declared itself. I’ll include a great table that symbolizes the situation well:

As you can see, they are quite far from the expected 20% return on revenue – 17-18% in 2022, now 10-12% expected for 2025 – so much so that we don't even know exactly where the bottom of the numbers will be. It's almost safe to say that the 2025-2026 numbers look pretty flat.

💎Exclusivity is not increasing, but decreasing💎

As more and more people own Porsches, it is not certain that the brand will shift towards luxury. Ferrari's 13 units make their cars much more exclusive than Porsche's 310 units. Porsche AG (P911) has also "realized" this, so they want to sell higher-priced, premium models in their power signals, with lower volumes – 250-300 cars – and higher margins.

📣Trade union📣

I generally don't like companies with unions. The large number of unionized workers can cause extra costs for the manufacturer, such as not being able to close factories or lay off workers.

🚗Automotive scandal🚗

Many unexpected scandals have already ruined automotive manufacturers, think of the Volkswagen diesel or the Takata airbag scandal. Although I give a low chance that something similar will happen to Porsche models, it is certainly not zero. A serious wave of recalls is enough, which causes significant additional costs.

🏛️State intervention🏛️

The state tends to subsidize car manufacturers rather than regulate them very harshly, and it's no coincidence. The German state - but also the American one - would rather save car manufacturers in trouble than let tens of thousands of workers lose their jobs, because from now on it's also a political issue.

I made a kind of self-check list that confirms my thesis about the company:

low or zero debt: YES/PART/NOT
significant economic benefit that can be protected in the long term: YES/PART/NOT
excellent management: YES/PART/NOT
excellent indicators, significant owner value creation: YES/PART/NOT
the majority of the total return comes from reinvesting the cash generated, not from dividends: YES/PART/NOT
appropriate company valuation: YES/PARTLY/NO

Based on the above, no matter how much Porsche wants to be a luxury manufacturer, it is in second place behind Ferrari. A year and a half ago, the above 6-point list would have looked much better, which says a lot about the company's vulnerability. I do not doubt the products of Porsche AG (P911), but the market dynamics and the huge headwinds it has to withstand. According to Morningstar, Porsche is a narrow moat company, Ferrari is a wide moat company, and I think this is also true. They have no equal in gasoline sports cars, the question is how many more years will people use gasoline cars.

👛Porsche AG (P911) company valuation👛

In this section, I will examine the company's current valuation compared to historical values and consensus fair values.

Rating metrics

In the two rows below you can see valuation metrics. The first row shows the current valuation, the second row shows the historical valuation. Although I don't consider these metrics particularly good, as they don't take many things into account, they can be used as a benchmark.

Share price (2025-04-18) 43.86 EUR; P/E: 11.07; EV/EBITDA: 4.39; P/FCF: 15.23 (Based on Finchat.io)
Historical median valuation (since IPO): P/E: 15.72; EV/EBITDA: 6.47; P/FCF: 19.98 (Based on Gurufocus)

Why don't you see a DCF model in this segment? Because each input data produces a huge variance in the output, and most of the data is an estimated value. Therefore, the valuation will never actually be a single exact number, but rather a valuation range can be defined.

You should apply a margin of safety to this price range, according to your risk appetite.

So don't expect an exact price, no one can determine this for a stock. However, there are fair value prediction services, almost every major stock filter site has one, I have aggregated them below. However, if you want a good stock support service, you should subscribe to The Falcon Method-, entry prices are given for the stocks analyzed there.

Rating

Peter Lynch median P/E: EUR 62.74
Morningstar: EUR 64 (4 stars)
Gurufocus: N/A (due to lack of data)
AlphaSpread, base case: N/A (due to lack of data)
SimplyWallst: 55.27 EUR
Substack analysis: 48 EUR

Average price (based on 4 ratings): 57.5 EUR (24% undervalued compared to average, at current price of EUR 43.86)

How to interpret the numbers? The above "margin of safety" rule should be applied according to your convictions, so if you really believe in the company, you can buy it at a fair value, but if you proceed in 10% steps (whose conviction is strong), the math would look like this:

10% margin of safety: 57.5*0.9=51.75 EUR
20% margin of safety: 57.5*0.8=46 EUR
30% margin of safety: 57.5*0.7=40.25 EUR
40% margin of safety: 57.5*0.6=34.5 EUR
50% margin of safety: 57.5*0.5=28.75 EUR

Of course, the list could go on and on, but the point is that the right purchase price for you will be determined by the level of your conviction.

source: Finchat.io, Porsche AG (P911) price

The problem with the above average price is that, on the one hand, there is very little data available for the sites to determine any quantitative price, and on the other hand, the price is falling along with the metrics and negative forecasts from management. The share price has fallen by almost a third from EUR 120, and this situation is exacerbated by the tariff war. Since the stock market prices the future, these effects are probably already built into the price, BUT, they usually appear as an overreaction.

There is no question that Porsche AG (P911) looks cheap, but companies with such deteriorating metrics always look cheap, only then the numbers follow the low price. Porsche AG (P911) looks like a pretty big turnaround story, the question is who wants to bet on it. The price is so low that the current market capitalization – EUR 39.74 billion – is less than the 2024 revenue – EUR 40.1 billion -, so the P/S value has fallen below 1, but the P/B is only 1.7. Of course, this does not say anything about the quality of the company, only about its valuation.

🌗Significant news and the last quarter🌗

In this section, I will examine what happened in the last quarter, whether there were any significant news/events. If the company reports semi-annually, we examined this period.

Porsche's latest quarterly report is for the last quarter (Q2024) of 4, but in the meantime, the full year 2024 has also been reported, so it's worth taking a look at both.

2024 and the main news of the global market:

Oliver Blume confirmed the maintenance of the dividend of EUR 2.31 per share
Management has officially withdrawn its goal of having 2030% of its vehicles sold be electric by 80 (currently it stands at 13%, thanks to the new electric Macan, among other things).
In 2024, revenue decreased by 1% (from EUR 40.5 million to EUR 40.1 million), the number of cars sold decreased by 3% (from 320221 to 310718 units)
In 2024, 4 models will be renewed: the electric Macan and Taycan, the Porsche 911 and the Panamera (and the Cayenne at the end of 2023, so actually 5). The increase in the volume of these models could compensate for the fundamentally decreasing revenue and unit sales.
Apart from the weakness in the Chinese market, Porsche sales in other markets increased
70-80% of the profit was generated by the Cayenne (over 100 thousand units sold) and the Porsche 911 (over 50 thousand units sold), which is half of the volume
They announced the development of a new gasoline-powered SUV platform, which will take 36 months to develop (3 years, which is short on an automotive scale, but the Chinese work with a faster development cycle, as they mentioned in Q1), and will cost around EUR 800 million (which obviously increases development costs and worsens cash generation, but at least it will flow back into the business).
Short-term forecast: operating margin of 10-12% in the short term, 17-18% in the medium term

The Chinese market

Management also acknowledged that the weakness of the Chinese market is unlikely to recover in the long term (in 2021, the number of cars sold was 95671, which fell to 56887, a 41% reduction).
Sales of the Porsche Taycan fell most in China, falling by practically 70% due to very powerful, much cheaper competing models.
Buyers in the Chinese market are not looking for what European buyers are looking for – heritage, driving experience, sound, fine mechanical elements such as a good chassis, manual transmission, brakes, etc. – but rather view vehicles as technological gadgets, the digital functions of which are interesting.
This is probably a local structural problem, not affecting other markets

25% declared duty

Porsche does not plan American production (German production will remain to preserve the brand's prestige)
will pass on the tariff to buyers (so the price of cars will increase)

Management comments

There may be errors in the description because it is translated by an AI, so it often messes up the company names (e.g. ViforSmart=V4Smart), but since I didn't want to modify the original management comments, I left them.

2024 Q4, Jochem Brechner

"Net cash flow remains at a strong level of the record year '23 with a cash conversion over 70%, which provided us with the foundation to keep the dividend at €2.31. But, of course, in the long term, we at Porsche are pursuing higher ambitions."
"Based on our expected benefits from our Road to 20 program and the outlined expectations for the Chinese market, the required higher flexibility for the expected transition period in markets and expected continued fragile supply chains, we target a group return of sales of 15% to 17% in the midterm."

2024 Q4, Oliver Blume

Then, for the new product, we announced a car in the SUV segment touching the Macan segment, but being differentiated to the Macan. We have an ambitious engineering timing there, aiming for around thirty six months for developing such a car seems to be realistic. (A thought on this: the Chinese development cycle is said to be about half that, 18 months)
"And then, Jose, I take your second question on the guidance for 2025 with a 10% to 12% return on sales. And you were asking how strongly we believe in reaching this target given the headwinds we were discussing and giving a slower start into this year with Q1. And a short and crisp answer would be, of course, we strongly believe in the 10% to 12%. Our internal projections are sitting well within that corridor. And if no tariff scenario hits us severely, we really have everything set up in terms of our cost programs, in terms of our targets in the market that we will reach the guidance."
"So looking at the million that will affect our 2025 profitability, we outlined that we see three effects there. We have 300,000,000 for products, exclusives and software. We have another 300,000,000 for the organizational structure, and we have 200,000,000 for the battery businesses with Salesforce Group and ViforSmart. And you're right, not all of these are one off expenses, but a huge part of these are one off expenses."
"Now with the battery business, of course, Salesforce Group and also Vifrost Smart are young companies that are being ramped up. And you're right, they're not profitable as of now, so that's the special effect that we see there.” (Porsche is trying to solve battery development in-house)

Next quarterly report, Q2: 2025.04.29.

✨Other interesting facts about Porsche AG (P911)✨

Everything that was left out of the previous ones, or if there is any special KPI - key performance indicator - or concept that needs to be explained, it is also included here.

☝️The Porsche 911 story: One of the “mythological” elements surrounding the brand is the Porsche 911 legend. Porsche’s second sports car after the 356 would have been the 901, but this number was already registered by Peugeot, so the model was given the 911 number in 1963. Over the past 60 years, the model has become so popular that the Porsche brand itself is often identified with it. Therefore, when the public stock market launch took place, the stock identifier introduced to the German market was $P911, and 911 million shares were issued. The Porsche 911 is still the company’s highest-margin product.

🚗🏎️VW-Porsche relationship: The Porsche-Piëch family has always had a very close relationship with each other due to their family ties. So much so that, for example, the 914 and 924 models – older people may still remember these iconic sports cars from the 80s – were produced in Volkswagen factories. The Porsche 944 was outsourced to Audi factories, which is why there are so many legends about the mixing of VW/Porsche/Audi parts, as the brands shared countless elements with each other, with minor and major modifications.

(I.e.Special holding structure: I have written before that the hostile takeover of Porsche failed miserably due to the excessive debt burden that Porsche could not pay, so in the end Volkswagen AG bought Porsche AG. Before the takeover, Porsche split its structure into Porsche SE and Porsche AG, with Porsche SE being the “parent company” of Porsche AG. Volkswagen AG’s shares – around 30.1% at the time – went to Porsche SE. This created a unique situation where when Porsche SE was unable to pay its debts, it had to sell Porsche AG to Volkswagen, but since Porsche SE was also a shareholder in Volkswagen, Porsche SE owned Volkswagen AG, which in turn owned Porsche AG. For this reason, Porsche SE still holds 53.3% of Volkswagen's voting rights. For the sake of easier understanding, I have re-inserted the previous figure.

(I.e.The Volkswagen Act: (officially: Gesetz über die Überführung der Anteilsrechte an der Volkswagenwerk Gesellschaft mit beschränkter Haftung in private Hand – Volkswagen-Gesetz) After World War II and the division of the country, the West German state considered Volkswagen to be such an important industrial company that it created the Volkswagen Law. According to this, only those who acquire more than 80% of the company can fully control Volkswagen. The state bought itself into VW with 20.1%, so this is practically impossible to implement.

⏳The durability of Porsches: Two-thirds of the Porsches produced since 1948 are still on the road, which is probably a world record.

(I.e.Porsche super petrol: Porsche doesn't want to give up on internal combustion engines, understandably, because they have a real market advantage here. They want to replace gasoline with a "CO2 neutral" fuel, which they call "super gasoline". However, I haven't read any press reports about it in 2-3 years. about something, so that project is probably dead or has been shelved.

✨Brand value: Every year since 2018, Brand Finance has been ranking the most valuable premium and luxury brands, and until now, Porsche has always been the most valuable brand (Ferrari is 9th). Obviously, this is a subjective and not a market-based ranking, so it should not be given such great importance. There is also a relative strength-based ranking (I think adjusted for company size), in which Ferrari was 2nd and Porsche was 5th in 2024 (I think this is a much more realistic ranking), but interestingly, Lamborghini is now 10th.

source: Brand Finance

🔑Key Performance Indicators (KPIs)🔑

In the case of Porsche AG (P911), there are two things worth paying attention to:

the territorial distribution of revenues
the number of cars sold

Basically, I would pay special attention to China, and after the introduction of tariffs, to the revenues of the US market and to the management's communication - how consistent it remains.

Summary of Porsche AG (P911)

Summary of the analysis, drawing lessons.

The situation of Porsche AG (P911) is a typical turnaround story, and as the saying attributed to Warren Buffett goes: “turnarounds rarely turn.” In other words, Porsche is in trouble, and the price is following the deterioration of the metrics. Since the management has cut its forecasts, according to their own admission, the situation will not improve much in the next 1-2 years. It can also be felt a little that the company is moving back and forth between the past with gasoline engines and the future promising electric cars, as if it does not fully know what the right direction is. The same can be felt in the management, and in February 2025 they made two top management changes, hoping to steer Porsche in a different direction.

Nevertheless, I do not think that Porsche will disappear from the stage of history, because the brand is too strong for that and this is not the first crisis of the company. The current low exchange rate also seems excessive, into which the market has probably already priced the serious doubts and the future 25% tariff. However, there is a lot of uncertainty, so anyone who is bothered by serious share price movements or does not have the right conviction about Porsche AG (P911) and the positive outcome of the presumably long-term transformation should not build a position in the company.

Frequently Asked Questions (FAQ)

Which broker should I choose to buy shares?

There are several aspects to consider when choosing a broker - we will write a complete article about this - but I would like to highlight a few that are worth considering:

size, reliability: The bigger a broker, the safer it is. Those with a banking background – Erste, K&H, Charles Schwab, etc. – are even better, and well-known brokers are typically more reliable.
expenditures: Brokers operate with various costs, such as the account management fee, the portfolio fee - which is the worst cost -, the purchase/sale fee and the currency exchange cost (if USD is not deposited in the brokerage account)
Availability of instruments: It doesn't matter which broker has which market available, or whether they add the given instrument upon request and how quickly.
account type: cash or margin account, the latter can only be used for options. For Hungarian tax residents, having a TBSZ account is important, but citizens of other countries also have special options – such as the American 401K retirement savings account – which are either supported by the broker or not.
surface: is one of the most underrated aspects, and it can be a real pain. Anyone who had an account with Random Capital, a now-defunct Hungarian broker, knows what it's like to work on a platform left over from the 90s. Erste's system is lousy slow, Interactive Brokers requires a flight test, and LightYear believes in simple but modern solutions.

Based on the above, I recommend the Interactive Brokers account because:

the world's largest broker with a strong background
a few million instruments are available on it, and shares listed on multiple markets – e.g. both the original and the ADR – of a single share are often available
az Interactive Brokers a discount broker, they have the lowest prices on the market
you can link your Wise account to them, from which you can quickly transfer money
Morningstar's analyses are available for free under the fundamental explorer (good for analysis)
EVA framework data is available under fundamental explorer (useful for analysis)
they have both cash and margin accounts, Hungarian citizens can open a TBSZ
you can use three types of interfaces: there is a web and PC client and a phone application

What data sources did you use to analyze stocks?

For quantitative analysis, we primarily use various stock screening sites, and for qualitative analysis, we use company reports and other analyses, such as the Substack channel, podcasts - Business Breakdowns - and similar sources.

What matters: value or quality?

The answer is both, but quality is more important. It is much better to buy a very high-quality company at a fair price than to buy shares of a cheap but poor-quality company.

What is the best time frame to buy shares?

The minimum is 5 years, but you should consider the time horizon from 10 years to infinity. Our approach is typical "buy and hold", the emphasis is on selection, then we try to hold the shares for as long as possible, which requires conviction. We rarely sell, mainly if we feel that the thesis we set up has been broken or if we have made a mistake.

Which is better: individual stocks or ETFs?

There is no truth to this question. It is very easy to track the market with an S&P 500 ETF, and it is worth doing for beginners, because it can be done with a little knowledge and practice. Analyzing individual stocks requires 30-50 hours per company, so we do not recommend it to those who do not like it.

Do you hold the shares in a TBSZ account?

Yes. As a Hungarian citizen, the tax advantage over a traditional cash-based account is so great that it is worth opening a new TBSZ account every year, and then the withdrawal of money is also solved (but if you do not want to withdraw anything from it, you can extend these)

Why don't you specify a specific purchase price for the shares in your analyses?

We do not set purchase prices for several reasons: firstly, because it is impossible to calculate the exact value of a company. Secondly, because we cannot give investment advice, these analyses are only made to support the decisions of others. That is why we use fair value estimates from other services, as well as a certain margin of safety. Ultimately, your conviction will decide how much a company is worth to you.

Which stock price will rise or fall?

Nobody knows, because there is no magic bullet that can tell. It can be based on mathematical probabilities. The prices of high-quality companies that have growing sales, are able to reinvest the cash generated into the business, and have high intrinsic value creation tend to rise in the long term. But in the short term – a few years – the market and the price can move anywhere.

Legal and liability statement (aka. disclaimer): My articles contain personal opinions and are written solely for my own entertainment and that of my readers. iO ChartsThe articles appearing on this website do NOT in any way exhaust the scope of investment advice. I have never intended, do not intend, and am unlikely to provide such advice in the future. The information provided here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT a guarantee to buy or sell financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.

Porsche AG (P911) Stock Analysis – They're Not Pressing the Gas