German financial regulators are to investigate after shares of car maker Volkswagen jumped an eye-popping 82% today, a day after a similar surge.
Speculation on the reason for the rise centred on a reduced number of shares available and on hedge funds needing to unwind bad bets on the share’s direction.
The surge came amid reports that big investors had been forced to buy scarce shares to get out of mistaken bets the shares would fall.
On Sunday, Porsche Automobile Holding, which owns the company that makes the 911, Cayenne and upcoming Panamera saloon, said it increased its stake in VW to 42.6% plus enough options to give it 74.1%. Since the German state of Lower Saxony, where Volkswagen’s headquarters is based, holds just over 20% of the company’s shares, as little as 6 or 7% would be freely available.
Yesterday, the shares were suddenly up nearly 147% to close at €520 compared with Friday’s closing price of €210.85. Today, Wolfsburg-based Volkswagen’s shares spiked as high as €1,005 in Frankfurt trading, nearly doubling yesterday’s close.
At that level, Volkswagen was worth some €296bn, greater than Exxon’s market cap of £214bn (€268bn).
They later settled back to close at €945.
“Yesterday, VW has almost doubled its market capitalisation,” said Oliver Roth, the director of equities trading at Close Brothers Seydler on Frankfurt exchange floor.
“That’s crazy; they should stop trading that share.”
Torsten Baar, a spokesman for Frankfurt exchange operator Deutsche Boerse, said the Volkswagen stock would remain in trade as long as it still had a free float of 5%.