Volkswagen pleads guilty in US Court on emission scandal

VolkswagenIn last week of February 2017, Volkswagen AG (OTC: VLKAF), a German automobile company, has reported a swing to profit in the fiscal year 2016, compared to net loss in the prior fiscal year. It is to be remembered that owners of Lamborghini and Porsche incurred considerable losses in the year 2015 on account of diesel emission scandal.

The company has however recovered from the loss of reputation. But the series of lawsuits filed by different clients and plea of guilty at US District Court in Detroit, we assume that the stocks of Volkswagen AG will remain bearish in the future.

The company has generated a net profit of €5.4 billion in the fiscal year 2016 as compared to a loss of €1.6 billion in the same financial period last year. If we exclude the charges, the company recorded an underlying profit of €14.6 billion or $15.5 billion in the fiscal year 2016.

Wochit News

There is a 14% year over year increase in operating profits of the company after the overwhelming rise in the sale of luxury brands like Porsche and Audi. The operating profit matches with the estimates made by the analysts. There is a 6.7% increase in profit margin in the financial year 2016 as compared to 6% in its previous year. In the current fiscal year, the company is anticipating to register a profit between 6 and 7 percent. In fiscal 2016, the revenue of the company increased to 1.9% year on year to €217.3 billion.

In the final quarter of the fiscal year 2016, the company took charge of €4.4 billion. The figures were more than twice the charge made in the last nine months. With this, the total fees taken by Volkswagen into account of cheating has risen to €22.6 billion or $23.9 billion. The company in September 2015 has admitted that it rigged the engine software of 11 million cars so that they can come clean on emission tests.

But in reality, pollutant emission of Nitrogen Oxide was approximately 40 times the permitted level. It is surprising to note that Volkswagen that owns about 12 global brands including MAN and Scania overshadowed another automobile company Toyota to become the best seller in the fiscal year 2016. Approximately 10.3 million vehicles were sold by the company which is 3.8% more than its last fiscal year.

Volkswagen on last Friday pleaded guilty to fraud, obstruction of justice and providing false statements by $4.3 billion settlement reached with US Justice Department in January 2017. It is interesting to note that Volkswagen has never pleaded to guilty to any court of the world for criminal misconduct. The company has agreed that it will spend $25 million for addressing the concerns of car owners and environmental protection agencies. The guilty plea was accepted by Sean Cox, and the sentencing date has been set for 21st April 2017. So, it is likely that the stocks would not rise as long as the judgment is not announced.

The stocks of Volkswagen are trading near lower ends of Bollinger bands. In addition to this, the shares have fallen below 50 days moving average. This underlines the weakness in the company’s shares. If we consider a stiff resistance on the upside, the shares are likely to trend downwards and test the support level of approximately $140.

Volkswagen stock price march 14th, 2017

Volkswagen stock price March 14th, 2017

If you want to benefit from the downtrend of the company, you can trade with a PUT Option contract and pick the validity period of 1 week. It would be advisable that you invest when the stocks are near $152 in cash market.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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