VW stock drops on Porsche move

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VW stock drops on Porsche move

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A rollercoaster ride for Volkswagen’s shares is over.

Having rocketed this week, the stock dived after VW’s biggest investor – sports car maker Porsche -said it would release into the market some of the VW shares it has under option to buy.

The scramble for VW shares came about because Porsche revealed that it had bought or had options to purchase 74 percent of them.

The state of Lower Saxony owns 20 percent of VW, which left just five percent available in the market.

The problem was that many investors had bet that VW shares would go down in value; through so-called short selling they had sold them with a contract to buy them back at a lower price later to make a profit.

With so few shares available, supply and demand pushed up the price dramatically over 142 percent on Monday, almost 82 percent on Tuesday before Porsche acted to end the stampede and the stock fell 45.3 percent.

Porsche said it has done nothing wrong, though the German securities watchdog BaFin said it wants to check there was no insider trading and market manipulation.

Porsche also said it is not going to “cash in” though it could make billions from selling its options into the market.