Porsche Excluded from DAX Index After 60 Percent Drop in Shares

Luxury car manufacturer Porsche will transition from the DAX index of the 40 companies with the largest market capitalization to the MDAX index of medium-sized companies, announced the operator Deutsche Börse Group on Wednesday.

The German sports car manufacturer went public at the end of September 2022 with high expectations and an initial public offering (IPO) that ranked among the largest in the history of the German economy.

Just a few months later, it was included in the main stock index DAX as its shares, after starting at an IPO price of €82.50, reached nearly €120.

Recently, its shares have been trading at around €45.

In just under three years, sentiment in Volkswagen’s branch has significantly deteriorated and the profitability of the former ‘golden goose’ has sharply declined.

Porsche has not been spared from the issues facing the German automotive industry, whether it is the weakening of the Chinese market, problems with electric vehicle sales, or a customs dispute with the United States, notes the dpa agency.

Due to a sharp decline in profits, the company was recently forced to significantly reduce costs.

The collapse of Porsche symbolizes the crisis in the German automotive industry, which is struggling with declining profits, and under such conditions, the share of the automotive sector in the DAX index has significantly decreased over the past 10 years.

Unlike the car manufacturer Porsche AG, Porsche Automobil Holding SE remains part of the main DAX index. This holding company is the largest shareholder in the Volkswagen group, with a 31.9 percent stake, and also holds about one-eighth of the shares in Porsche AG.

Deutsche Börse analyzes indices in March, June, September, and December, including the MDAX.

The market value of freely traded shares on the stock exchange is a decisive factor for its inclusion in a higher category or for transitioning to a lower rank, reminds dpa.

Porsche’s CEO Oliver Blume attributed the exit from the leading index to ‘technical factors’.

– Deutsche Börse, when including companies in the DAX, considers, according to its own provisions, only freely traded shares, and their share in the case of Porsche AG is just over 12 percent – Blume said to Frankfurter Allgemeine Zeitung.

Porsche may have a smaller market capitalization, he acknowledged, but more of its shares, as he says, are available to the general public.

Due to these technical factors, Porsche, in his words, narrowly ‘missed’ the conditions for remaining in the DAX.