At the peak of the financial crisis of 2008 Volkswagen became the most valuable company in the world for one day despite being on the brink of bankruptcy

Hedge funds lose $30 billion on VW infinity squeeze

Volkswagen Infinity Squeeze. The October 2008 short squeeze on shares of Volkswagen AG has since been referred to as the “Mother of all Squeezes”. It was also perhaps the earliest use of the term “Infinity Squeeze”. It was during the middle of the worst financial crisis since the Great Depression, and Volkswagen was increasingly being viewed as a potential bankruptcy candidate. In other words, Volkswagen was viewed as an exceptionally attractive short candidate. However, at very depth of the crisis, an orchestrated short squeeze on VW shares caused VW to briefly become the most valuable company in the world, worth more by market cap than Exxon Mobil.

The VW infinity squeeze seemed entirely counter intuitive at the time. And that is exac… Continue Reading (8 minute read)

10 thoughts on “At the peak of the financial crisis of 2008 Volkswagen became the most valuable company in the world for one day despite being on the brink of bankruptcy”

  1. AllISaidWasJehovah

    The TLDR is that when a company is failing and the price is expected to fall people “short” the stock. This consists of borrowing stock and selling it straight away hoping to buy it back later for cheaper and then returning it to the person you borrowed it from. You then pocket the difference.

    Volkswagen was in big trouble and many people were shorting it expecting the price to go down but it didn’t. Then people who had shorted Volkswagen stock had to buy it back to repay it to the people they had borrowed from driving the price up even further.

    The end result was that for one day in the midst of chaos Volkswagen was the most valuable company in the world.

    This is known as a “short squeeze”.

    https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3aabef39a26

  2. mnlaker

    And now a similar thing might be happening with GameStop.

  3. FrolicWithWombats

    I’m wondering what this has to do with lemons.

  4. wwarnout

    “…for one day…”

    This shows how disconnected from reality financial markets are – just like when Bezos becomes billions richer in one day.

  5. QFanon

    So dope and smart the way we run the global economy I’m so happy we have economists to remind us better things aren’t possible. Clearly any kind of oversight by the plebs would overwhelm this so self evidently rational and fair status quo.

  6. Slinktard

    By lying about their products?

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