Aston Martin is entering the list of listed automakers with an IPO that values the British company at more than $5 trillion. But his first day of trading in London was off to a rough start.
The favorite carmaker of fictional British secret service agent James Bond saw its shares at £19.00 ($24.70), valuing it at £4.3 billion ($5.6 billion).
The final list price is 16% below the top of the range led by Aston Martin, reflecting investor doubts about whether the carmaker should be valued in the same league as Italian rival Ferrari.
Shares fell nearly 5% in London trading.
Coming to the stock market, the British company is urging investors to shrug off fears about US threats to tax foreign cars and the potential for Britain’s planned exit from the European Union to disrupt supply chains and markets.
Aston Martin, which has a history of bankruptcy filings, is now making healthy profits.
It sold more than 5,000 cars in 2017, its best performance in nine years. This resulted in a profit of 876 million pounds ($1.1 billion), almost 50% more than the previous year.
Earnings for the first half of this year show that the momentum has continued. Revenue was up 8% year-on-year, and profits were up 14%, according to numbers released last month.
Aston Martin has been looking to capitalize on its premium brand in recent years. But Bernstein analysts see several potential problems.
They say it’s not as powerful as the Aston Martin brand Ferrari (, backed by decades of racing history and numerous Formula 1 championships. The British carmaker has much tighter margins than its Italian rivals and a troubling history of uneven sales. )
With cash from the IPO earmarked more for existing shareholders than for investing in the company, Aston Martin executives may be overly optimistic about the success of a planned SUV.
“Given current financial conditions and apparently relatively strong demand, it’s a long shot for us to see if Ferrari’s profitability can be matched,” Bernstein analysts wrote recently. “We can’t see anywhere.”
Aston Martin’s owners include parent Mercedes-Benz Daimler (Investindustrial is a private equity firm and investors based in Kuwait. )
CNNMoney (London) Posted October 3, 2018: 4:38 am ET