Most of us are aware that Porsche is part of the Volkswagen empire, and has been for years. But far fewer people know the incredible story of how that situation was nearly reversed, and how tiny Porsche, a company selling 100,000 cars per year, came within a whisker of buying Volkswagen, which was punting out over 6 million.
If you’re thinking you’re not interested in boring boardroom stuff, don’t go yet. For one, the plot is Hollywood thriller-level gripping, but more importantly, the guys at Donut Media are the ones telling the story, complete with their trademark South Park-style animations.
The Porsche-Volkswagen links go back decades, and include some high-level family connections that play a crucial role in the story in its later stages. But things really get going in the late 2000s when Volkswagen is reeling from the effects of the financial crisis, and Porsche, having recovered from its own near-death experience a decade earlier, starts buying up stock.
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Porsche lied to the business world, claiming it had no interest in buying Volkswagen outright, and was merely interested in safeguarding its independence, yet was secretly acquiring stock to increase its stake in the bigger company, ready for the final takeover.
As this activity boosted Volkswagen’s share price, hedge funds piled in, guessing a price crash was imminent, which would make each short-selling fund a bundle of cash. Instead, some of them ended up losing their shirts.
And right there is another great reason to watch this video. If you’ve heard the term short selling and never really understood what it means or how it works – and I’ll confess to being in that category – Donut’s Nolan Sykes does a fantastic job of explaining it, drawing a parallel between the Porsche-Volkswagen case and what happened earlier this year with Gamestop.
As the incredible story plays out, we get a ridiculous situation where Volkswagen is briefly the most valuable company in the world despite being on the brink of total collapse, and is just about to be snapped up by Porsche when some surprise moves turn the tables completely. In the end, the companies agree to merge, but VW soon emerges as top dog. Honestly, it plays out like an Ocean’s 14 movie, and is definitely worth a watch.