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.

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