Aston Martin IPO: Shares fall below offer 1900p offer price on debut

Daniel Craig as James Bond standing next to a vintage
Aston Martin DB5 in the film Spectre.
Eon Productions

• Aston Martin IPO’d in London on Wednesday. Shares were priced
  at £19, valuing the luxury car maker at £4.3 billion.
• After a small initial price bump, shares have fallen to
  £18.40.
• The performance underlines weakness in the London IPO market
  and ongoing trade war and Brexit fears in the auto sector.

LONDON — Shares in luxury car maker Aston Martin dropped below
their IPO offer price on the first day of dealing in London on
Wednesday.

Aston Martin, famous 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. After reaching
an early high of £19.15, shares had dropped to £18.4080 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 initially hoped it could sell shares for as much as
£22.50 a piece.

“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. Last week Funding
Circle, one of the world’s biggest peer-to-peer lenders,
struggled to manage an opening day share price pop in its £1.3
billion IPO. Shares have fallen by 20% since then.

Neil Wilson, the chief market analyst at Markets.com, told
Business Insider: “Investors are clearly shying away from UK risk
assets. 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 is likely not helped
by fears within the wider auto sector about the impact of Brexit
and ongoing global trade wars. Last month Swedish car maker

Volvo said it was delaying its IPO plans due to trade war
fears.

As part of the IPO, Aston Martin CEO Andy Palmer is in-line to

collect shares worth £22 million in the luxury carmaker over the
next four years.