Goldman Sachs is out with its near-term forex outlook
Volkswagen (ETR:VOWG_p) and Goldman Sachs (NYSE:GS) write off Northvolt investments
Following Northvolt's bankruptcy filing and the resignation of CEO Peter Carlsson, Volkswagen and Goldman Sachs have announced that they will write off their investments in the Swedish battery cell manufacturer. While Volkswagen has already made significant write-downs, Goldman Sachs plans to reduce the book value of its $900 million stake to zero by year-end.
Is this just another negative report about Volkswagen?
You could look at it that way. However, we would like to point out that bottoms are formed whenever sentiment couldn't be worse. Everyone agrees that Volkswagen is in crisis. Everyone agrees that they slept through everything in Wolfsburg. All the ingredients are there. Now is the time to turn to this stock again. We can already see the bottom:
We think that the stock will bottom out in the purple box between €78.64 and €50.28 and break out strongly upwards. The range is so large because it trades in a superordinate correction that began in 2015. We see the ideal target at €65.14.
However, corrections usually end with a lowest low. 79.38 is the lowest low to date in the correction that has been ongoing since 2015. Therefore, the share price would only need to fall below this price to complete the correction.
What are we getting at? Even though the distance to €65 is about 20%, it can happen quickly. We want everyone to be prepared for the possibility of a very good and long-term opportunity arising here. And we want to communicate that in good time. Our customers achieve significantly better trading results with us as partners because we bring order to chaos. For us, prices are mathematical equations that always work out. Please note our Black Friday offers, which you can find on our website.
Northvolt: From beacon of hope to crisis
Just a few months ago, Northvolt was celebrated as a central player in the European electric car battery industry. But production problems and financial difficulties led to a drastic slump. The company filed for Chapter 11 bankruptcy protection, and Peter Carlsson resigned as CEO. At the same time, he estimated that the company needed $1 billion to $1.2 billion in capital.
Volkswagen writes off stake
Volkswagen, Northvolt's largest investor with a stake of over 20 per cent, has already significantly reduced the book value of its stake. According to insiders, however, this has no impact on the Wolfsburg-based carmaker's annual results. In the 2023 annual report, the value of the investment was still stated as 693 million euros, after it was over 900 million euros in 2022. A company spokesperson said that the company would not comment on possible further consequences.
Goldman Sachs follows Volkswagen
Goldman Sachs, the second-largest investor, manages investments of just under $900 million in Northvolt through its private equity funds. The write-down decision contrasts sharply with optimistic forecasts made in the spring that predicted the investment would increase in value to 4.29 times the purchase price and continue to rise until 2024. In a statement, Goldman Sachs emphasised that the risk was limited due to the funds being widely diversified.
Other investors react
The Swedish pension fund AMF also announced that it would review the value of its investment and make adjustments. A spokesperson said that Northvolt's value had fallen significantly. According to insiders, other investors have already written off their shares in full. We suspect that this is trading BMW. The Munich-based company realised early on that this was not a good idea.
The end of a success story?
For a long time, Northvolt was seen as a beacon of hope for the European battery cell industry. However, recent developments highlight the challenges in a highly competitive market where production problems and capital bottlenecks can quickly lead to significant losses in value. The company's future remains uncertain.
Disclaimer/Risk warning:
The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.