What has generally been considered a rock-solid, safe but boring bet has turned into the most interesting name on any index, at least for this week and the next few.
Germany’s famous car maker saw its shares plummet around 30% as the news hit markets, but it has already recovered a big chunk of that ground.
The saga seems far from over though, with further claims today that the German government may have been aware of the issue, and many of the details of the company’s liabilities related to the matter yet to be confirmed.
Volkswagen at this stage looks likely to survive this. The company has what are generally considered very high quality products, it has a strong (if slightly tarnished now) brand and sits near the top of the carmaking food chain.
It is also cash rich, with plenty of cover on the books for a rainy day, or rainy six months even. Its cash reserves totalled some €17bn at the end of 2014.
The question for Volkswagen shareholders and bond holders is whether to bail out, if they have not already, or hold and wait for the crisis to pass.
Anybody who has not yet invested in the company may be asking whether this is as low as you will ever see the company, and therefore it represents an opportunity to get in on the cheap.
According to Twenty Four Asset Management CEO Mark Holman, Volkswagen bonds look cheap enough to consider in the wake of the debacle.
Twenty Four has so far elected not to pull the trigger however as they cannot get comfortable with the risk level while events are still unfolding at this pace.
