The Swedish automobile giant Volvo experienced a significant drop in its share value, hitting an all-time low, following the initiation of a massive share sale by its parent company, Zhejiang Geely Holding Group.
What Happened: As reported by CNBC on Thursday, Volvo’s shares experienced a drastic fall of 14% on Friday morning as Geely kickstarted the share sale. Although the shares had slightly rebounded, they were still down by 10.31%. According to Reuters data, this marked a record low in the company’s share value.
In a statement released on Friday, Geely, the parent company, confirmed the share release of Volvo. The action was described as a part of their long-term strategy aimed at improving Volvo’s liquidity and providing increased opportunities for sustainable long-term value growth for both institutional and retail investors.
Why It Matters: The decision by Geely to sell a portion of its stake in Volvo is a strategic move intended to boost the liquidity of the Swedish car manufacturer and offer more opportunities for long-term value growth to both institutional and retail investors.
Post the sale, Geely’s stake in Volvo will be at 78.7%, indicating that the shares sold were over 3% of the previous ownership. Geely held around 82% of Volvo previously.
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