Bayerische Motoren Werke AG (also popularly known as Bavarian Motor Works, or simply BMW) is a German multinational company that designs, manufactures, and sells cars and motorcycles. Additionally, the company sells spare parts and other associated accessories, and it also offers financial services, such as leasing, retail customer and dealer financial services, as well as insurance products. BMW is a true kingpin in the world of automobiles, with its iconic round blue and white logo, an enduring symbol of ‘The Ultimate Driving Experience’. The company was founded in 1916 and is headquartered in Munich, Bavaria, Germany.
BMW has a colourful history that is inspiring and challenging at the same time. The company started as an aircraft engines manufacturer, helping service the massive demand from the German Air Force during World War I. Following Germany’s loss in the war, the country was banned from producing any warplanes or aircraft engines, but BMW remained in business by starting to produce motorbikes around the same time.
The company then soon diversified into producing cars, with the iconic Dixi model launched in 1928, marking BMW’s entry into the automobile industry. BMW then started building aircraft engines again and even shut down their cars and motorcycles production during World War II. Interestingly, BMW’s production facilities were bombed during the war, and the company then struggled to successfully return to car production during the 1950s. Capital injection from brothers Herbert and Harald Quandt saved BMW from bankruptcy in 1959, with the family continuing to be major shareholders in the company to date.
BMW sells its cars under the brand names BMW, Mini, and Rolls-Royce; and its premium motorcycles under the BMW Motorrad brand. BMW cars and motorcycles are sold in over 140 countries and territories around the world, making the company a leader in the premium sector within the industry.
Bavarian Motor Works is listed on the Frankfurt Stock Exchange, where its stock trades under the ticker symbol BMW.
BMW Stock History
BMW has not had any stock split in its recent history. As a seller of premium products, its stock falls in the general category of Consumer Cyclicals, which represents stocks that generally rise and fall in tandem with the overall economic conditions.
The BMW stock traded around the €30-price handle at the turn of the millennium. The stock largely consolidated during that time and only managed to cross above €50 in mid-2007. The effects of the 2008 Great Recession, however, pressured the stock to lows of below €20 by January 2009. The subsequent global economic recovery then inspired a long-term rally that saw BMW print an all-time high at circa €120 in March 2015. The subsequent correction would, however be overextended by the effects of the 2020 Great Lockdown, pushing the BMW stock to below €45 in March 2020. The stock has, however, recovered and continues to march towards the psychological price of €100 in 2021.
BMW has always been a willing dividend payer, but the cyclical nature of its business has always meant that its payouts vary according to the prevailing business realities.
How to Trade BMW Stock
Here are the factors to consider when trading BMW stock:
- Legislative and Taxation Issues
BMW has thirty-one production and assembly facilities in 15 countries. With also hundreds of thousands of employees around the world, the company’s bottom line is vulnerable to changes in legislative and taxation issues. Like other automobile companies, BMW has to deal with factors such as supply chain protection, licensing agreements, government tariffs on existing and innovative technologies such as automation, as well as emissions laws in different jurisdictions.
- Global Economic Conditions
BMW cars and motorcycles are generally high premium products whose demand is subject to the prevailing global economic conditions. This explains why the BMW stock came under pressure during both the 2008 Great Recession and the 2020 coronavirus-inspired Great Lockdown. On the flip side, the stock is a great performer during periods of positive global economic conditions as well as favourable monetary policies, such as low interest rates.
Competition is fierce in the lucrative automobile industry. BMW faces competition from fellow members of ‘Germany Big 3’: Audi and Mercedes-Benz. Due to its global operations, the company also has to deal with other big competitors such as Tesla, Toyota, Fiat, Porsche, and Lexus. Competition in the industry is as cut-throat as it is evolving. The major factors driving competition include technological innovation, electro-mobility, autonomous driving, product efficiency, product performance, as well as style and design.
- Periodic Earnings Reports
The BMW fiscal year runs from January to December, and the company releases periodic earnings reports to update investors on its business health and performance. Positive numbers can inspire higher prices, whereas negative numbers could trigger lower prices.
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