A Look at Volkswagen (XTRA:VOW3) Valuation After Porsche’s EV Delays and Profit Warning

Volkswagen (XTRA:VOW3) has found itself in the spotlight this week after its majority-owned subsidiary, Porsche, announced a major delay in the launch of several electric models and sharply lowered its profit outlook for 2025. This move was more than a routine guidance update; it signaled a strategic shift back toward combustion and hybrid options, which triggered Volkswagen to warn that its own 2025 operating profits would take a sizable hit. The series of profit warnings and EV setbacks from Porsche is now rippling through Volkswagen's narrative, forcing investors to assess the group’s direction just as competition in global auto markets is intensifying.

With the news sending tremors through both stocks, Volkswagen’s shares have moved modestly higher over the past year but have struggled to sustain momentum, posting only a 5% return. The share price saw a near 9% pullback over the past month, reversing much of the quiet progress built up earlier in the year. These developments cap off a period already marked by slower EV demand in Europe and China, making the group’s reaffirmed sales guidance feel more like cautious reassurance than a bold outlook.

Given the recent whiplash in both direction and sentiment, the big question now is whether the market’s caution has left Volkswagen undervalued or if all these future risks have already been factored into its current price.

Most Popular Narrative: 36% Overvalued

The most widely followed narrative pegs Volkswagen as significantly overvalued, based on a range of strategic missteps and weakening fundamentals. According to PittTheYounger, the gap between current execution and ambitious targets has widened, casting doubt on the company’s fair value.

It is one of the three biggest carmakers in the world, with a dominant market share of some 21 per cent in its home market, which actually grew in the recent past. Yet both from a strategic and a global perspective, the Wolfsburgers are under marked pressure. The corporation is among those traditional German industrial behemoths that got used to a comfortable market position, complete with above-average employee compensation and lavish management structures. In its sometimes arrogant self-assuredness, VW first perpetrated one of the biggest corporate scandals in German economic history when it twisted the measurement of its cars' carbon emissions. It then missed out on the electric revolution. At the same time, the OEM became much too dependent on its China activities, which developed into a separate minefield on its own, while pivoting aggressively towards Mexico in its North American operations. All these chickens now come home to roost, and Volkswagen owned up to as much when it presented its most recent quarterly report this week.

Want to know why this narrative calls for one of the starkest markdowns in the automotive space? There is a key financial assumption that could explain such a low fair value, yet the story behind it is anything but straightforward. Curious which deep cracks the narrative claims are hidden beneath Volkswagen’s surface? Dig in to discover what might really be driving this controversial valuation.

Result: Fair Value of $68.4 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected regulatory changes or a stronger-than-forecast rebound in EV demand could quickly upend the overvaluation thesis and shift sentiment.

Find out about the key risks to this Volkswagen narrative.

Another View: Is the Market Missing Something?

Our SWS DCF model presents a different picture, suggesting Volkswagen’s shares are trading well below intrinsic value and potentially overlooked by the market. Could this method be highlighting an opportunity that others are missing?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Volkswagen to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Volkswagen Narrative

If you think there’s more to the story or want to dig into the numbers yourself, you can shape your own Volkswagen narrative in just a few minutes. Do it your way.

A great starting point for your Volkswagen research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Smart moves start with fresh ideas. Step beyond Volkswagen and gain your edge by focusing on the right themes currently shaping the markets.

• Explore breakthroughs in artificial intelligence with AI penny stocks, which highlights companies leading advancements in machine learning and automation.
• Discover underappreciated opportunities by using undervalued stocks based on cash flows to identify stocks trading below their cash flow-driven fair values.
• Find reliable income streams and potential winners with strong yields and consistent payouts through our dividend stocks with yields > 3%.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com