Porsche AG (P911) share price is in deep trouble and the situation could worsen in the coming weeks as its electric vehicle (EV) business slows. The stock crashed to a low of €76 on Monday, its lowest swing since January 26th. It has plunged by over 36% from its highest point on record.
Porsche’s China woes
Porsche’s stock has imploded as the company has reported weak financial results. Its total sales crashed frm €10.09 billion in Q1’23 to over €9.0 billion in Q1’24. Its battery electric vehicles segment’s revenue tumbled from over €11.4 billion to over €5.7 billion in Q1’24.
Porsche’s profits also continued moving in the wrong direction as its profit after tax tumbled to €926 million from €1.4 billion a year earlier.
Worse, the situation could accelerate this year as its electric vehicle sales slump. According to Bloomberg, the company has started talking to Chinese dealers to smooth its relationship as EV sales tumbled.
It is hard to predict whether Porsche and companies like Volkswagen and BMW will be able to compete with Chinese companies. Porsche focuses on the high-end market, which is being challenged by Chinese firms like Zeekr, Lotus Technology, Huawei, and Nio.
Chinese companies have received billions of dollars in government support and are now manufacturing vehicles at a cheaper price. Tesla, the giant American company, also has a big market share in China.
Therefore, some analysts believe that Porsche should spin out its EV brand and focus on its pure ICE and hybrid vehicles. If it did this, it will be the biggest automaker to separate its ICE and EV business. Renault shelved its Ampere IPOafter observing most EV stocks tumble.
Porsche has another China problem in that the European Commission is considering tariffs on Chinese EVs, a measure that will lead to retaliation. If this happens, China could levy tariffs on European vehicle brands like Porsche. Besides, China has now become one of the biggest vehicle manufacturers in the world.
China is an important market for China. The most recent numbers showed that the company shipped over 16k vehicles to the country, the second-biggest market after Europe.
Porsche AG share price forecast
The daily chart shows that the Porsche AG’s stock price has been in a strong freefall in the past few weeks. This crash happened as the company’s recovery faded at €96.60 on April 4th of this year.
Porsche’s stock has collapsed below all moving averages and is forming a rounded top pattern. It has also crashed below the support at €81.78, its lowest swing in October last year. Also, the MACD indicator and the Relative Strength Index (RSI) have all drifted downwards.
Therefore, the stock’s outlook is bearish, with the next point to watch being at €72.20, its lowest point in January.
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