- Aston Martin went public in London on Wednesday. Shares were priced at £19, valuing the luxury-car maker at £4.3 billion, or $US5.6 billion.
- After a small initial price bump, shares have fallen to £18.40.
- The performance underlines weakness in the London initial-public-offering market and ongoing trade war and Brexit fears in the auto sector.
LONDON – Shares in the luxury-car maker Aston Martin dropped below their IPO price on the first day of dealing in London on Wednesday.
Aston Martin, known for making James Bond’s cars, priced its shares at £19 in its initial public offering on the London Stock Exchange. It valued the business at £4.3 billion, or $US5.6 billion. After reaching an early high of £19.15, shares had dropped to £18.40 as of 8:40 a.m. GMT (3:40 a.m. ET) on the London Stock Exchange.
The dip comes despite the fact that Aston Martin had already priced shares on the lower end of its guided IPO range. The carmaker had hoped it could sell shares for as much as £22.50 apiece.
“Some investors have expressed caution that the valuation seems a little on the high side, when compared to Ferrari, and the early price action certainly lends some support to that analysis,” Michael Hewson, the chief market analyst at CMC Markets, said in an email.
“It is true that Aston Martin has only just recently returned to profit last year with revenues of £876 million and pre-tax profits of £87 million, after a whopping £163 million loss the year before.”
Aston Martin, whose cars sell for hundreds of thousands, has been bankrupt seven times across its 105-year history, which may give some investors pause for thought.
The early performance also underlines the apparent weakness of the London market when it comes to IPOs. Funding Circle, one of the world’s biggest peer-to-peer lenders, struggled to manage an opening-day share-price pop last week in its £1.3 billion IPO. Shares have fallen by 20% since then.
“Investors are clearly shying away from UK risk assets,” Neil Wilson, the chief market analyst at Markets.com, told Business Insider. “FTSE performance is driven by sterling, really. International investors don’t need exposure to UK assets so maybe shying away. Certainly, ever since Brexit, there hasn’t been the volume of foreign money in UK market.”
Wilson added that Aston Martin’s performance was unlikely to be helped by fears within the wider auto sector about the impact of Brexit and ongoing global trade conflicts. Last month the Swedish carmaker Volvo said it was delaying its IPO plans over trade fears. On Tuesday, the owner of the British carmaker Vauxhall warned of “dramatic consequences” for its manufacturing if there were a “no deal” Brexit.
As part of the IPO, Aston Martin CEO Andy Palmer is in line to collect shares worth £22 million in the luxury-car maker over the next four years.