Porsche to join Germany’s DAX index thanks to its robust business model

Despite the fact that it has been less than three months since its stock market debut, the leading luxury carmaker, Porsche, is about to join Germany’s prestigious DAX index. The index contains the country’s 40 leading firms, and Porsche will actually replace Puma, one of the world’s largest sportswear makers.

According to the company’s CFO, Lutz Meschke, Porsche’s fast entry into the index is a reflection of how robust its business model is, and how much investors like it. He added that this is evident even during the challenging environment, referring to the current economic problems, including strong global inflation and rising costs.

Deutsche Boerse, Germany’s stock exchange operator, published a statement saying that the company is set to join the DAX index on December 19th.

Porsche outperforms all other German car brands

Previously, Porsche emerged on the Frankfurt stock exchange in late September with an extremely high-profile listing. In fact, it is considered to be the biggest one that the local financial industry has seen in years. During the IPO, Volkswagen raised approximately $9.4 billion, or roughly 9 billion EUR.

Porsche now plans to use this money in order to switch to electric vehicles — an ambitious task that will make the company significantly more environmentally friendly, which is also partially responsible for its high popularity.

Speaking of popularity, there is no doubt that Porsche holds the investors’ favor. While shares of major firms are going down around it, the carmaker saw its own share price climb by nearly 30%. It went from 82.50 EUR to around 106 EUR on Tuesday afternoon.

The sharp price surge is not the only notable thing about its performance, however. The firm’s valuation right now exceeds 96 billion EUR, even exceeding Volkswagen, its own parent company, which is valued at 83.5 billion EUR. Both companies have outperformed Germany’s other big players, including BMW (56.6 billion) and even Mercedes-Benz (68.8 billion).

Porsche is in, Puma is out

As mentioned previously, Porsche’s entry into the DAX will mean that one of the currently listed firms will have to leave the index. According to Deutsche Boerse, the company that will get pushed out is Puma, which will instead appear on the MDAX index, created to offer a way to invest in medium-sized firms.

Unfortunately for Puma, the company is not performing as well as Porsche. In fact, it falls under the category of firms that are struggling as part of the difficult times caused by inflation and the recent increase in restrictions involving COVID-19 in China. This is affecting the company greatly, as China remains Puma’s key market.

With an increase in restrictions, the company has seen a drop in demand, which is already affecting it. It also recently lost its chief executive officer, Bjorn Gulden, who switched over to Adidas, Puma’s German rival. Of course, nothing is set in stone, and Puma could still eventually find its way back into the DAX index after recovering from the current difficulties at some point in the future.