Volkswagen’s €7.4bn Engine Sale and an Analyst’s Upgrade: A Tale of Two Signals

Volkswagen’s preferred shares have clawed back more than 9% from their July low, yet the stock still trades at roughly 76 euros — a far cry from the 109-euro peak hit in December last year. That gap captures the deepening divide between those who see the carmaker’s drastic restructuring as a turning point and those who view the sell-off as a rational response to mounting structural headwinds.

The most vocal optimist is Daniel Schwarz of Bankhaus Metzler. On Tuesday, he lifted his price target from 105 euros to 130 euros and reaffirmed a buy rating, arguing that the planned job cuts mark the beginning of a recovery. The timing is notable: the stock closed the previous session at 75.78 euros, a 28.5% decline year-on-year and still 19.4% below its 200-day moving average of 94.05 euros. The relative strength index sits at 38.2, signaling persistent bearish momentum rather than an oversold bounce.

Yet the analyst’s conviction rests on a set of moves that have sent a very different message to other market participants. Volkswagen is simultaneously pursuing a €7.4bn sale of its marine-engine division to private equity firm Bain Capital, a deal first reported by the Financial Times and believed to be in an advanced stage. The transaction aligns with chief executive Oliver Blume’s strategy to streamline the portfolio and funnel cash into the costly pivot to electric vehicles.

That asset sale is only part of the equation. According to Insider Sport, Volkswagen is also weighing the disposal of its stakes in two of Germany’s top football clubs — 8.3% of Bayern Munich and 10.8% of VfB Stuttgart — as it seeks to slash marketing costs and concentrate capital. The fact that the Wolfsburg-based automaker is even contemplating a sale of these so-called crown jewels underscores the severity of the savings drive. Meanwhile, the core clubs VfL Wolfsburg and FC Ingolstadt remain untouched for now.

Should investors sell immediately? Or is it worth buying Volkswagen?

The broader restructuring roadmap includes the possible closure of four domestic plants — Hannover, Emden, Zwickau and Neckarsulm — affecting as many as 100,000 jobs. The state of Lower Saxony, which holds 20% of the voting rights, has signaled it will push back against blanket shutdowns. Economy minister Olaf Lies said the supervisory board would scrutinise any such plans. The tension between management’s cost-cutting ambitions and political resistance adds another layer of uncertainty.

For the stock, the conflicting signals are reflected in a 30-day annualised volatility of 30.82% — a clear sign that anxiety remains elevated. The Metzler target of 130 euros implies a 71% upside from current levels, but even the old target of 105 euros stood above the 52-week high. Critics caution that a price-to-earnings ratio of just 3.5 does not automatically make the shares a bargain. “Such companies are often cheap for a reason,” one Onvista commentator noted, warning that depressed valuations alone are not a buying signal.

Chart technicians point to the heavy-volume breakdown as evidence that the bulls have lost control. The stock trades well below the 50-day average of 84.98 euros, and the RSI has yet to enter oversold territory. While the recent uptick from the July low of 69.20 euros suggests selling pressure may be easing, the path to a sustained recovery remains littered with hurdles — not least the outcome of the supervisory board’s deliberations on the plant closures and the formal closing of the Bain Capital deal.

In the coming weeks, investors will receive official confirmation on both the marine-engine sale and the future of the football stakes. Until then, Volkswagen’s shares are caught between an analyst’s bet on a turnaround and a restructuring that still has everything to prove.