Luxury car manufacturer Aston Martin (LSE:AML) has made a disappointing entry to the London market, with shares dropping to lows of £17.75p in morning trading after opening at £19.
The firm, which has gone bust seven times in its 105-year history, opened with a valuation of £4.3bn, below its initial hopes for a price tag of over £5bn. This figure prices it at around 23.6X EBITDA, slightly more than its main rival Ferrari.
According to The Guardian, James Bond’s carmaker of choice had initially indicated that shares would be priced between £17.50 and £22.50. However, earlier this week it narrowed this range to between £18.50 and £20 a share.
The firm, which is trading as Aston Martin Lagonda, has sold an initial25pc of its stock to institutional investors, company staff, customers and members of the Aston Martin Owners Club. Private investors can buy in from Monday.
The business has listed under new chief executive Andy Palmer, who has been spearheading a turnaround after years of it struggling to make a profit. The former Nissan veteran has been working to grow customers number by expanding the Aston Martin’s model range and using a higher turnover of new products to drive sales.
According to the BBC, current projects an electric flying car, luxury homes, and personal submarines. It is also looking at providing a luxury alternative in the electric vehicle market through its Lagonda division.
In August, the business reported half-year profits of £42m while revenues rose 8pc to £445m. It expects full year-sales to hit between 6,200 and 6,400 units, up from a record 5,098 in 2017. It hopes its stock market listing will allow it to invest in higher production volumes and new products and has a near-term aim of building 10,000 units in 2020.
However, analysts have expressed concerns about the risk associated with its plans to launch a new core model every year from now until 2020. For example, James Congdon, managing director at Quest, said:‘Aston Martin has very aggressive growth plans. The execution of that growth needs to be flawless — nothing eats cash more than a car company when the cycle turns. There is concern that it’s more cyclical than the commentary has been.’
By listing, Aston Martin has set itself apart from luxury rivals like Jaguar, Bentley, and Rolls-Royce- all sold to foreign owners over recent years.
Palmer said: ‘Today’s listing on the London Stock Exchange represents a historic milestone for Aston Martin Lagonda. We are delighted by the positive response we have received from investors across the world and are very pleasedto welcome our new shareholders to the register. We are excited about the momentum across the company and are fully focusedon continuing to deliver our exciting growth strategy through the Second Century Plan.”