how much was vw stock in 2008

This disparity caused short sellers to rush to buy more stock to cover their positions, driving the stock price further still through October 2008, with VW stock price now hovering just above €900, and at one point exceeding €1,000 in intraday trading.

Full Answer

How much did the VW share price fall?

At one point VW shares leapt to €635 each. Porsche, which has made billions out of its transactions in VW options, saw its shares fall 14.5% during the day. The dealings in VW shares over the past few weeks have prompted the German market regulator BaFin to monitor price movements and it is now under pressure to mount a full-scale investigation.

Why did Porsche buy Volkswagen stocks?

Around 2006, Porsche decided that it wanted to get more voting rights and decision-making power as a Volkswagen business partner. The company ensured this through investments. After purchasing Volkswagen shares in swarms, the stock started to steadily increase over a few years by hundreds of a percent.

Why is VW worth so much more now?

The rise in VW's value comes as other European carmakers are laying off workers and temporarily closing production lines to cope with a likely fall in sales of up to 20% next year. Bosch, the world's biggest car component supplier, yesterday laid off 400 workers at one of its German plants.

Was there market manipulation in the Volkswagen stock market?

The move came as the German financial supervisor, Bafin, announced a formal investigation into gyrations of VW stock that briefly made it the most valuable company in the world a day earlier. “We need to take a closer look if there was market manipulation,” a Bafin spokeswoman, Anja Engelland, said.

How much did Volkswagen squeeze in 2008?

Panic among short sellers set in, and the supply-demand imbalance triggered a monumental short squeeze that drove its share price up from €210.85 to more than €1,000 in less than two days. Indeed, Volkswagen became the world's largest company by market value on October 28—albeit, very briefly.

What did Volkswagen hit in 2008?

Let's Talk About the VW Short Squeeze It's not just from big money and institutions. For a brief moment, on October 28th, 2008, Frankfurt-based company Volkswagon (VW) saw its shares more than quadrupled in two days. With that monster move, VW briefly became the biggest company in the world. Yes, the world!

What was Volkswagens highest stock price?

At the end of trading yesterday, VW's share price closed at €675 ($847), a gain of 33% on the day, but not enough to hold onto the title of world's largest company by market capitalization. The secret to VW's earlier valuation success, say the analysts, lay in its successful hedge-fund trading strategies.

How much did the Volkswagen stock squeeze?

It is estimated the VW short squeeze cost short sellers about £30 billion ($38.33 billion).

How high did Volkswagen stock go up in 2008?

VOW. F - Volkswagen AGDateOpenHighOct 29, 2008527.03597.96Oct 28, 2008484.52978.92Oct 27, 2008365.86604.16*Close price adjusted for splits.**Adjusted close price adjusted for splits and dividend and/or capital gain distributions.1 more row

What was the biggest stock squeeze?

Meta Platforms Inc. lost $232 billion in one day, making it the largest single-day loss in stock market history. In 2021, GameStop(GME) was the subject of a remarkable short squeeze that caused some hedge funds to lose billions of dollars.

When did Volkswagen stock squeeze?

2008The biggest short squeeze in history occurred in 2008 when Porsche embarked on an unexpected series of maneuvers that left it controlling a huge percentage of Volkswagen's (VW) stock. This briefly made VW the most valuable listed company in the world.

When did VW stock split?

The first split took place 17 March 1969 at a ratio 1:2 (from DM 100. - to DM 50. - share). The second split was carried out on 6 July 1998 at a ratio 1:10 (from DM 50.

What is the biggest short squeeze ever?

Biggest Short Squeezes of All TimeReliance Industries Limited (NSE: RELIANCE. NS) ... Piggly Wiggly. Piggly Wiggly was the first self-service grocery store in the United States. ... Harlem Railroad. ... Herbalife Nutrition Ltd. ... KaloBios.

How long will a short squeeze last?

Takeaway #1: Short squeezes typically don't last long. The Volkswagen short squeeze took the longest amount of time to climax at 31 trading days. The average short squeeze in this data set lasted approximately 12 days from the onset to the peak.

How long did VW squeeze peak last?

In October 2008, Volkswagen saw its Frankfurt, Germany-listed shares more than quadruple in two days, briefly becoming the biggest company in the world. After Volkswagen's peak on Oct. 28, 2008, the shares fell 58% in four days, and a month later the stock was down 70% from its top, giving back most of the squeeze.

How high can a short squeeze go?

If you short a stock at $10, it can't go lower than zero, so you can't make more than $10 per share on the trade. But there's no ceiling on the stock. You can sell it at $10 and then be forced to buy it back at $20 … or $200 … or $2 million. There is no theoretical limit on how high a stock can go.

How much did VW lose from shorting?

Ultimately, those hedge funds that had shorted VW stock ended up losing an estimated $30 billion from their trades. “I have had hedge fund managers literally in tears on the phone,” said one London-based analyst on the 29th, whilst other hedge-fund managers reportedly compared the Porsche disclosure to a “nuclear bomb going off in our faces”, describing the resulting losses as “a bloodbath”.

What happens if you short VW stock?

But with around 12 percent of VW’s outstanding shares sold short, it was impossible for every short seller to buy back their required shares and close out their positions. As such, a massive imbalance between supply and demand for VW stock emerged.

When did Porsche short squeeze Volkswagen?

The entire episode harkens back to the days of October 2008, when Porsche inflicted a similar short squeeze on Volkswagen (VW), its fellow automaker and occasional but long-running business partner. Indeed, right in the midst of the global financial crisis (GFC), when following the collapse of Lehman Brothers investors were panic selling across the world and markets were tanking, the “mother of all short squeezes” arose, as one analyst at the time put it.

Did Porsche make money?

But Porsche was able to make huge sums of money, which is even more startling given how badly the automotive industry was doing at the time. Reports emerged of angry traders raging at what they perceived to be a Blitzkrieg attack by Porsche on the financial system, seemingly allowed by German regulators, which permitted it to secretly accumulate VW stock options without having to declare its hand.

What happened to VW stock in 2008?

In 2008, Porsche bought up so much of Volkswagen’s stock it caused VW’s stock prices to soar. Within two days, price of VW quadrupled. In turn, this caused short sellers to lose tens of billions of dollars in a span of a couple of days. Hedge funds lost $30 billion in the VW squeeze. Within four days, the stock dropped in price by 58%.

How much of VW did Porsche own in 2008?

By late 2008, short positions ballooned. The kicker was that Porsche owned 43% of VW shares, 32% in options, and the government owned 20.2%. As you can see, this left very little that could be purchased by anybody else.

How Long Did the 2008 VW Short Squeeze Last?

As you know, with short squeezes, they don’t last. What happened next was no shocker. Within four days, shares fell 58%, and within a month price was down 70% from it’s peak on October 28th. According to Ally Invest chief investment strategist Lindsey Bell, it was a classic short squeeze pattern.

How did GameStop follow Volkswagen?

Sure enough, GameStop followed Volkswagen’s path with a rapid fall in price to the $40 range. All within a week.

When did VW become the biggest company in the world?

For a brief moment, on October 28th, 2008, Frankfurt-based company Volkswagon (VW) saw its shares more than quadrupled in two days. With that monster move, VW briefly became the biggest company in the world. Yes, the world!

Why did Porsche make the announcement?

Porsche stated that they had “decided to make this announcement after it became clear that there are by far more short positions in the market than expected.”

What percentage of VW shares will Porsche dump?

Porsche said it would dump up to 5 percent of its VW shares — presumably at a great profit — “to avoid further market distortions and the resulting consequences for those involved.”. Volkswagen stock, which rose to above 1,000 euros, or to about $1,284, at one point on Tuesday, plummeted on Wednesday to close at 517 euros.

Who is Porsche's chief financial officer?

Porsche’s financial strategy of securing control over Volkswagen has been the brainchild of its chief financial officer, Holger P. Härter, who sits on the larger company’s board. The Schaeffler Group, a maker of roller bearings, used a similar approach to seize control of Continental, one of the world’s largest auto parts makers, this summer.

What is the Porsche episode about?

The episode highlights how Porsche, the sports car manufacturer that keeps investment bankers and hedge fund managers moving at high speeds down the world’s highways, beat both at their own game.

Is Porsche taking over VW?

Porsche, which has engaged in a creeping takeover of Volkswagen over several years, unleashed a punishing market dynamic this week on investors who believed VW stock would lose value if Porsche took majority control.

Is Porsche a family owned company?

Porsche and Scha effler are family-controlled companies, a fact that appears to have limited the political fallout from the rough-and-tumble tactics. Porsche is often held up by German critics of American-style capitalism as a company that makes enviable profits while paying its workers a premium wage.

Does Porsche have to disclose cash options?

German law does not require Porsche to reveal details of the price at which it bought the cash options, or the strike price at which they can be exercised, the two main variables in the profit calculation.

Is Porsche a wrongdoer?

Porsche, whose own shares jumped Wednesday by 37 percent, flatly denied any wrongdoing. “Porsche has not been active in the market during these share price movements,” it said. “Allegations of price manipulation by Porsche are therefore without foundation whatsoever.”

How much does Porsche own Volkswagen?

On Sunday, Porsche said it raised its stake in Volkswagen to 42.6 percent from 35 percent, and that it had taken options for another 31.5 percent.

What strategy did hedge funds use to buy Volkswagen shares?

Hedge funds had used several strategies in VW shares. One was to exploit the difference in value between two classes of Volkswagen stock. Another was to buy into Porsche while betting that Volkswagen shares would fall.

What happens when Porsche options expire?

When the options expire, Porsche will receive the difference between the market price of the shares and the exercise price of the options. That could amount to tens of billions of euros.

What is Porsche's strategy?

Its strategy has been to make a creeping takeover of the company, purchasing options or shares in the open market and later announcing its new shareholding level in the company.

Which is the most valuable car company in the world?

The auto industry is struggling, but for a few minutes on Tuesday, Volkswagen became the most valuable company in the world, one with a market value greater than Apple, Philip Morris and Intel combined.

Did Morgan Stanley have a large exposure to Volkswagen?

Jeanmarie McFadden, a spokeswoman for Morgan Stanley, said the firm had less than $25 million in exposure to Volkswagen. A person who had talked to Goldman officials, but who refused to be quoted by name, said that firm did not have a large exposure to Volkswagen. Porsche has made big profits on trading options in VW before.

Is VW a German company?

Volkswagen is one of the 30 companies in the DAX index, Germany’s most prominent stock index, and index funds own a significant number of shares. Those funds, however, may sell shares Wednesday. On Tuesday night the German stock exchange said it would reduce from 27 percent to 10 percent the weighting of VW in the index.

How much was Volkswagen short interest in 2008?

But even by October of 2008, the short interest seemed not-too excessive. It stood at just 12.8% of outstanding shares being short.

Why did index funds hold Volkswagen?

With this, index funds made up around 5% of Volkswagen share ownership due to VW’s big ol’ weighting in the DA X index. So all these index funds were required to hold Volkswagen in proportion to its weight in the DAX, of course.

How much did Porsche lose in the Volkswagen short game?

Porsche pretty desperately needed money at this time, so this move was more valuable than you know! On the flip side of this action, the hedge funds who had been playing the Volkswagen short game saw losses that exceeded $30 billion.

What was the automotive industry in 2008?

The Automotive Industry In 2008. For reference, in 2008, the whole auto sector was considered to be a pretty sexy short trade. Up until 2008, General Motors had been the largest automaker in the world for literally over 70 years. I mean, damn. That’s a long run.

When did Porsche take a swing in the world of financial maneuvers?

This was, and still is considered, the biggest short squeeze in history! In late 2008, amidst the global financial crisis: Porsche took a swing in the world of financial maneuvers. After a series of clever, intense moves, this all set the path moving for Volkswagen to briefly become the most valuable company in the entire world.

What happened to 12.8% short interest?

Now all of a sudden, the seemingly little short interest of 12.8% turned into an immediate, MASSIVE supply and demand imbalance. Millions of shares needed to be bought immediately even though there were no shares available to be sold.

Did Porsche own Volkswagen?

Before the madness that was 2008: Porsche had been a huge shareholder in Volkswagen. Then, come October of 2008: They took their already thick stake to 30%

When Did the Stock Market Crash in 2008?

From those October 2007 highs, the market spent nearly a year slowly declining, and then a stock crash hit on September 29, 2008. Those losses extended over the next few months until they bottomed out in March 2009.

When did the Dow go up in 2009?

Soon afterward, President Barack Obama's economic stimulus plan instilled the confidence needed to stop the panic. On July 24, 2009, the Dow reached a higher plane. It closed at 9,093.24, beating its January high. 34 For most, the stock market crash of 2008 was over.

Why did the Dow Jones Industrial Average fall?

1 Until the stock market crash of 2020, it was the largest point drop in history. The market crashed because Congress rejected the bank bailout bill. 2 But the stresses that led to the crash had been building for a long time.

What was the Dow's intraday low in 2008?

The Dow dropped to an intraday low of 11,650.44 but seemed to recover. In fact, many thought the Bear Stearns rescue would avoid a bear market . By May, the Dow rose above 13,000. 1 It seemed the worst was over. In July 2008, the crisis threatened government-sponsored agencies Fannie Mae and Freddie Mac.

What happened in 2008?

In July 2008, the crisis threatened government-sponsored agencies Fannie Mae and Freddie Mac. They required a government bailout. The Treasury Department guaranteed an estimated $25 billion of their loans and bought shares of Fannie's and Freddie's stock. 8 The Federal Housing Authority guaranteed $300 billion in new loans. 9 On July 15, the Dow fell to 10,962.54. It rebounded and remained above 11,000 for the rest of the summer. 1

What was the GDP growth in 2007?

At the end of January, the BEA revised its fourth-quarter 2007 GDP growth estimate down. 6 It said growth was only 0.6%. The economy lost 17,000 jobs, the first time since 2004. 7 The Dow shrugged off the news and hovered between 12,000 and 13,000 until March.

When did the stock market recover?

In 2013, the stock market finally recovered. Stock prices rose faster than earnings, creating an asset bubble. The Dow continued setting higher records until February 2018. 38  Fears of inflation and higher interest rates sent the Dow into the longest correction since 1961. Like many other past stock market crashes, it did not lead to a recession.