Should Investors Cheer a Potential Porsche Spinoff?
The automotive industry is poised to perhaps evolve more over the next two decades than it has over the past 10, as automakers race toward fleets of electric vehicles (EVs), autonomous cars, and transportation as a service. This evolution will require automakers to adapt, and that could be the driving force behind a Bloomberg report that Volkswagen (OTC: VWAGY) is considering separately listing its Porsche luxury sports car division.
The potential spinoff, which would likely take place next year, could unlock a higher valuation for the Porsche unit while giving Volkswagen an injection of cash to potentially use in acquisitions or to develop electric and autonomous vehicles. Keep in mind that companies such as Tesla have been able to fully capture investor enthusiasm for an all-EV future, while traditional automakers have lagged behind in valuation and investor optimism.
Considering that traditional automakers will need tens of billions of dollars in investments to transform and adapt, Volkswagen, the world's second-largest automaker, could use proceeds from a Porsche spinoff to kick-start its evolution.
Source Fool.com
