Deep Dive: Porsche ($P911)

Here’s something most of you won’t know unless you’re “into cars”.

Go to the Porsche website, and it will show that a new 911 GT3 costs around $250K.

Now here’s the fun part. If you want to buy the same car, pre-owned, which is 6 years old with 5,000 miles on the odo, it will set you back by $270K.

So, why is a 6-year-old car more expensive than a new one? Because it’s next to impossible to get a new one from Porsche. The demand for these cars is so high that the only way for you to get a new one is either to buy a few lower-end vehicles from the dealership to “secure an allocation” or to pay a dealer markup that can run into the hundreds of thousands of dollars.

And it’s not like these cars are limited-edition, with only a few dozen in production. Porsche has made 10K+ cars of this exact model. Porsche is the only mass-market manufacturer that is able to pull this off. The brand is so strong in part due to its history, social media hype, and its approachability.

Even with all this, the German automaker’s profits collapsed 99% in the first nine months of 2025, and the stock is now down 58% from its ATH.

So, how did one of the world’s most beloved car brands almost destroy itself? And more importantly, can the stock bounce back?

Welcome to Rebound Capital. If you are new here, we conduct deep research into beaten-down stocks and study companies that made a successful comeback. Subscribe for free and join 8,000 other investors to make sure you don’t miss our next briefing:

In 2020, Porsche began transitioning to EVs, and the CEO announced that by 2025, 50% of the company’s sales would be electric (and 80% by 2030!). The idea seemed to work well with the company selling 20,000 Taycans in 2020 and more than 40,000 in 2023.

Just as everything seemed to be going well, issues started popping up. While Porsche could get some early adopters for its EV, it could never convert it into the cult-like following it had for the 911. The car was missing the “soul,” aka the sound that had made Porsche famous.

Compounding this problem was the fact that Taycans were unreliable: issues plagued the car as it went overboard with features and gimmicks, and since it was a new model, most service centers were not equipped to repair it.

All this meant that the Taycans had brutal depreciation.

As we just saw, at the higher end, most Porsches appreciate due to their exclusivity. But a $200K Taycan was only worth $50K to $70K after just 3 years. The cars were impossible to resell, and sales of Taycan cratered by 50% in 2024.

Porsche had invested more than 6 billion euros in developing its electric vehicle and setting up the plant and tooling. With the falling sales, the company had to “realign its EV strategy”, which meant booking at €2.7 billion in extraordinary expenses in the latest quarter (which is why the profit dropped by 99%).

To be fair to management, there is a 2035 ban on the sale of new combustion-engine cars in the European Union. This, in addition to management trying to whitewash the Volkswagen emissions scandal (Volkswagen owns Porsche), might have led to the aggressive push into EVs.

As Jeremy Clarkson so aptly put it, the manufacturers are so busy building cars for the government that they forgot to make cars for the people buying them.

China was Porsche’s number 1 market in 2021, accounting for 1/3 of its overall sales. Over the past 2 years, the Chinese luxury car market has cooled significantly for Porsche due to a combination of factors like economic slowdown, weaker consumer spending on luxury goods, and fierce competition from Chinese EV makers (Nio, XPeng, BYD, etc).

The last point is important and easy to overlook.

If I were a legacy carmaker like Porsche building a performance car, I would be competing with other luxury brands like Ferrari, Lamborghini, and McLaren (which sells less than 1/10th the volume of Porsche). But the moment I build an electric car, then I am competing with arguably more advanced competitors like Tesla or BYD, who just built a 1,300 HP car that can jump over potholes.

As one YouTube comment eloquently put

YCombinator’s motto is “build something people want”.

Porsche spent billions trying to convince sports car enthusiasts that electric cars were better. They went on to make arguably one of the most advanced EV sports cars. But they never stopped to think if that’s what their customers wanted. Even Ferrari, which dipped its toes into EVs, soon found out that none of its customers wanted an EV sports car.

Ironically, all through this, their 911 sales continued to rise. All it takes for Porsche to rebound is for them to refocus on their IC engine cars. There is some good news on this end.

Another catalyst is that, effective January 2026, Porsche will have a new CEO, Michael Leiters (former Ferrari and McLaren executive), taking the helm. This ends the dual-role issue that has long plagued Porsche (Porsche’s CEO was also Volkswagen’s CEO).

Just because the stock is in a drawdown doesn’t mean that it’s undervalued. Entry price can make or break your investment over the long run.

Based on our valuation model, Porsche is fairly valued, and we don’t see any significant upside.

The following are our key assumptions:

Even with these pretty generous assumptions, the fair value is 9% below where the company is trading now. Based on our valuation framework, we are issuing a hold rating for Porsche.

There’s this iconic Porsche ad where a kid walks into the showroom and tells the sales rep he’ll be back in 20 years.

Enthusiasts wait years to buy their 911s. If they can be that patient, we can also wait a few quarters to see how the new management executes the turnaround plan and whether the company can successfully pivot away from its EV dreams. After all, what is Porsche without its iconic sound?

Thank you for reading Rebound Capital. If you enjoy reading our articles, please like the article by clicking the small ♡ at the end of the email. This helps with our ranking and lets more people see our work.