Pride comes before the fall

Deutsche Telekom – German Telecom – has had several stock offerings. Its first in 1996 was accompanied by a carefully orchestrated marketing campaign which was a huge success.

People who had never owned stocks flocked to the T-Aktie, to T-Shares. The Aktieneuphorie – stock market euphoria – in Germany lasted for several years.

The share price at the first offering was 28.50 DM (14.57 Euros), at the second 39.50 Euros, then 66.50 Euros. On March 6, 2000 the T-Aktie hit its highpoint of 103.50 Euros. 

From there it was all downhill. On September 30, 2002 it was at 8.42 Euros. At the beginning of 2015 it just about at 16 Euros.

Shareholders sued Deutsche Telekom in 2008 in Frankfurt. Their claim was that Deutsche Telekom misinformed them about the true value of the company’s real estate holdings, as well as other incorrect statements in their financial statements.

Over 17,000 shareholders demanded roughly 80 million Euros in damages. The court case focused on whether the shareholders were sufficiently informed about the level of risk.

The marketing hype of the T-Aktie was criticized by the shareholders after the fact. “Such marketing campaigns are not appropriate for selling stocks. This isn’t laundry detergent, not toothpaste,” said Jürgen Kurz, head of the German Society for the Protection of Securities Holders. “People should buy stocks in companies, but they should be informed about the risk they are taking.”

The Süddeutsche Zeitung – one of Germany’s leading newspapers located in Munich – wrote at the end of 2014: “The T-Aktie is not just any old stock. It’s a symbol. It made Germans hungry to invest in stocks, and then killed that appetite for years to come. The investors felt cheated, tricked. Unrequited love. Today only half as many Germans hold stocks as in 2000.”