Retail investors accelerate Volkswagen’s U.S. share spike


U.S. retail investors are buying the American depositary receipts of German automaker Volkswagen AG, some market participants said, accelerating a rally spurred by well-received VW announcements on its efforts to overtake Tesla Inc in the electric vehicles market.

Volkswagen’s U.S.-listed stock rose nearly 17% on Monday and Tuesday. By contrast, its preference shares, which comprise its main class of stock, gained almost 9% during the same period in Frankfurt.

Since institutional investors tend to trade the company’s more liquid preference shares, the outsize rise in Volkswagen’s thinly traded U.S. ADR is an indication of buying from U.S. retail investors, said Angelo Meda, head of equities at Banor SIM in Milan.

“U.S. retail investors have targeted Europe,” Meda said.

Volume in the ADRs, which are the only class of shares accessible by U.S. individual investors, was nearly 12 times the 90-day average on Tuesday, while volume in the preferred shares was around 2.5 times, according to Eikon data.

Retail investors have helped spur wild rides in a handful of stocks this year, most famously in shares of GameStop Corp, which surged by more than 1,600% in late January only to pare most of those gains the following month.

There was little recent mention of Volkswagen on Reddit’s WallStreetBets, the stock discussion forum whose denizens have been diehard supporters of GameStop, AMC Entertainment Holdings Inc and other so-called meme stocks.

But the carmaker drew heavy interest on trading-focused social media site Stocktwits, where message volume related to the U.S. listing spiked over 70%, with more than 97% of messages reflecting positive sentiment, according to the site.

A day after unveiling plans to build half a dozen battery cell plants in Europe, the German company said it aimed to more than double deliveries of electric vehicles this year. It also reiterated its confidence that cost cuts would help to raise profit margins in the coming years.

Volkswagen’s ordinary stock in Germany, which unlike the preferential class of shares is tied to the ADRs, gained 15.5% in two sessions.