Robinhood Traders Appear To Be Distorting Volkswagen’s Share Price

Robinhood Traders Appear To Be Distorting Volkswagen’s Share Price
Andrew Rummer

almost 3 years ago1 min

Since German automaker Volkswagen unveiled a renewed push into electric vehicles (EVs) at a glitzy event on Monday dubbed “power day” something weird has been happening to its shares. 

As the chart above shows, the New York-listed American depositary receipts (ADRs, in pink) have surged 45% over the past five trading days, dwarfing the 18% gain in the company’s Germany-listed preferred shares (in blue). In normal times, the two track each other very closely. 

For me, the widening gap suggests US-based retail traders are becoming very excited about VW’s plans. Smaller American investors are unlikely to have access to the German-listed preferred stock (ticker: VOW3) via their broker, so will be forced to buy the ADRs (ticker: VWAGY). Popular trading app Robinhood, for example, only lists the ADRs on its website. 

Furthermore, a search for “VWAGY” on Reddit shows a rush of excited posts about the 83-year-old carmaker’s strategy. 

And check out how much the trading volume in the ADRs – which are technically linked to the less-traded common shares rather than the preferred shares – has exploded this week.

Chart of trading volume in Volkswagen ADRs

Everything points to a rally driven by smaller US-based investors eager to hop on the latest EV-linked stock.

The gap potentially creates a short-term opportunity for investors able to buy into the German-listed stock and believe it will eventually climb to catch up with its US-listed cousin.



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG