cars

Volvo Cars gears up for $20 billion stock offering in coming weeks, report says


Valuation

Gothenburg-based Volvo Cars aims to secure a valuation of roughly $20 billion, one of the sources said, while another mentioned a possible range of $20 billion to $30 billion.

A third source suggested a $16 billion valuation was more realistic, citing the firm’s revenue outlook.

A $20 billion valuation for Volvo would be equivalent to six to seven times its earnings, a level some analysts say is high although it would put it in line with rivals Daimler and BMW. Tesla’s market valuation is about $745 billion. General Motors’ valuation is about $74.5 billion.

NordLB’s automotive analyst Frank Schwope estimated a valuation range of $10 billion to $15 billion.

“The strong margins seen in the first half of 2021 are unlikely sustainable as the market benefited from a strong post-pandemic rebound that is unlikely to continue,” Schwope said.

For Geely’s founder Li Shufu, who bought Volvo for $1.8 billion, the listing is a milestone on the road to transport of the future, where cars are part of an electrified network of mobility services generating data and business opportunities.

A slew of startups have tapped into the investor frenzy for EVs this year. Rivian, which rolled its first electric pickup truck off the production line this week, will seek a valuation of about $70 billion to $80 billion when it goes public at the end of this year, sources have told Reuters.

Nordea Chief Investment Officer John Hernander said the bank was interested in buying Volvo shares if a big enough chunk of the company was sold to keep liquidity high.

“That is key. We and many others have been really disappointed in the low liquidity in Traton,” he said, drawing parallels to the 2019 IPO of the truck unit, in which owner Volkswagen floated 11.5 percent of the shares.

Volvo warned this month that sales volumes in the second half of 2021 could fall year on year after it had been forced to cut production due to material shortages.



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