Porsche investors lose hope of a supercar stock

Some doubt Ferrari dream will ever become reality, with 2024 prospects not looking up

When Volkswagen spun off Porsche in late 2022, the investment community had visions of a supercar stock to rival Ferrari. The dream is yet to become a reality, and some investors are doubting it ever will.

While Ferrari shares have soared more than 50 per cent since the start of 2023, Porsche has declined by about a fifth, sending its market value closer towards parity with that of its former parent - a far cry from a gap that once stood at €40 billion (S$58.3 billion).

At the same time, Porsche's priceto-earnings (PE) multiple has fallen to a level less than a quarter of Ferrari's, weighed down by a downturn in China - for long Porsche's biggest market and production snags that have hit the roll-out of key models, including the electric version of its top-selling Macan sport utility vehicle.

Prospects for 2024 are not looking up either, with Porsche telling analysts last week that sales volumes would likely be flat.

"You thought you were buying into a business that was stable and improving, and it turns out that's not the case," said Jefferies analyst Philippe Houchois.