In the early 2000s, it was the state-owned Telia that was declared a public stock when the company was to be listed on the stock exchange and the public was invited to invest in the company.
When Volvo Cars went public last fall after years of speculation, it was also the largest IPO since Telia, with a market capitalization of just over SEK 18 billion.
In addition to large institutional managers, there were also thousands of small savers who jumped on the bandwagon. For both Nordnet and Avanza, it was the largest IPO in history, where, for example, Avanza had 105,000 customers who subscribed for the share.
— Volvo is, of course, a very strong brand and we have never sent out shares to 105,000 customers before. Then you are in the top league among the most owned shares in Sweden and a shrimp sandwich into the stock market, says Nicklas Andersson, savings economist at Avanza.
Step at the beginning
However, there were several similarities with Telia. Just like the telecom shares, Volvo Cars initially rose sharply on the stock market, but soon things would turn around.
Volvo Cars will release new interim figures at the end of next week. Archive image.
A sharp decline in line with the stock market in general in connection with the outbreak of the Ukrainian war was followed by a recovery this summer, but in the last three months, however, the share is down almost 40 percent and those who bought at the subscription price of SEK 53 have now seen it fall to around SEK 45.
The share has been affected by the generally sour stock market climate, but Nicklas Andersson points out that there are certain industry-specific challenges.
— We had a component shortage in the car industry already when Volvo came to the stock exchange, and it has lowered prices during this year and been a wet blanket. That problem has certainly eased now, but at the same time demand falls when interest rates rise and we are heading towards tougher times for households and it is becoming more and more expensive to buy or lease passenger cars.
When Volvo Cars presented the sales figures for October, the company did indeed see a certain increase on a monthly basis. So far this year, however, the company has reported 19 percent fewer cars sold than in 2021.
Polestar – a sinker
However, it is about additional factors. The electric car manufacturer Polestar, which is owned by Volvo to 48 percent, has fared poorly after the stock market listing on Midsummer Eve.
— A large part of Volvo’s valuation has been controlled by the ownership in Polestar. In a transition from a low to high interest rate environment and high inflation, growth companies such as Polestar have been devalued. The effect on Polestar has of course also affected Volvo, says Hampus Engellau, automotive analyst at Handelsbanken.
There is further skepticism surrounding the company based on the company’s Chinese ownership structure. Engellau again:
— I think there are two camps, one with investors opting out of Volvo’s shares, they have done that in the past as well. Then there is another camp that looks at how the company has historically been managed and considers the company to be independent.
New interim figures will now arrive on Friday. The market’s expectations are also relatively low, with expected profit before tax of SEK 2.6 billion, significantly lower compared to the previous quarter.
For small savers who have now entered the share, it can be a new shock, where the company can be severely punished on the stock exchange in the event of a loss of profit. During the downturn, however, the majority of Nordnet’s customers, for example, have chosen to keep the Volvo share, according to Frida Bratt, savings economist at Nordnet.
“There are a few factors that are important,” says Hampus Engellau before the report.
— Has the supply of components continued to improve? The big question mark for Volvo is to what extent China will start with incentives when it comes to car sales.