Volvo cools IPO expectations, targets $18B valuation

Volvo came out on October 4 with the announcement that it plans to go public via an initial public offering.

Under the plan, shares in the company are to be listed on Sweden’s Nasdaq Stockholm, with the first day of trading expected to be October 29.

Volvo originally planned to raise 25 billion Swedish kronor (approximately $2.9 billion) but on Monday announced a lower target of 20 billion Swedish kronor ($2.3 billion), pricing the IPO at the bottom of a previously announced range of between 53 and 68 Swedish kronor ($6.16 and $7.90) per share.

At that lower price, Volvo’s total value will be just over $18 billion. We’ll point out that Tesla, which sells fewer vehicles than Volvo, was valued this week at more than $1 trillion, or more than the combined value of every other publicly listed automaker on the planet.

Volvo didn’t list a reason for the lower target, but it may have to do with the current volatility in global share markets due to concerns about shortages and inflation. Many automakers have been hit by shortages in semiconductors, which has left investors wary.

China’s Geely is the current owner of Volvo and will remain the main shareholder following the IPO. The two have a close collaboration that extends beyond ownership, as both companies also share technologies and production facilities.

Ahead of the IPO, Volvo confirmed plans to buy out its various Chinese joint ventures owned together with Geely. The joint ventures cover plants and sales operations, and buying them out increases Volvo’s exposure to the Chinese market and the profits generated there.

Polestar is also due to go public, albeit via a so-called SPAC deal with Nasdaq-listed Gores Guggenheim. The Polestar deal is expected to close before the year out, after which Volvo and Geely will remain the main shareholders.