Own a Little Piece of Aston Martin

Aston Martin, the British luxury sports car manufacturer that was founded in a small London workshop in 1913 by Robert Bamford and Lionel Martin, went public on the London Stock Exchange in October 2018. According to their CEO, this is “a key milestone in the company’s history.”  How did the company get here though? After all, the company doesn’t have a stellar track record. To answer this question and understand everything that’s contributed to this major accomplishment, you need to look at their history, key deal with Daimler AG, as well as future lineups, which are in the works.

“In the first century we went bankrupt seven times,” Aston Martin’s CEO Andy Palmer told Automotive News Europe. “The second century is about making sure that is not the case.” It’s very true, Aston Martin had a very troubled past in the twentieth century, but it’s recovered nicely in the twenty-first. It’s managed to end its fiscal 2017 year with 87-million pounds profit, compared to 163-million pounds loss in 2016.

Things started to improve for the British luxury car manufacturer after they signed a deal with Daimler AG in 2013. Via this deal, Aston Martin had access to new technology and motors. The DB11 was the first car launched after the Daimler AG deal. It was first showcased at the Geneva Motor Show in 2016 and was very well received by the press and consumers. Fourteen-hundred units were ordered into production shortly after its debut and it was priced at £154,900 (with today’s conversion rate that’s $201,183). It won a prestigious Golden Steering Wheel Award in 2017 from Axel Springer, the largest publishing house in Europe. It’s almost impossible to get one’s hands on a DB11 these days and this is the car that single-handedly launched Aston Martin’s revival. Some would like to attribute the recent success to its CEO. Palmer joined Aston Martin in 2014. He’s managed to improve and revitalize the business in three years and holds a 0.6% stake in the company. DB11, as well as Palmer’s leadership, is what made this year’s IPO possible.

James Bond’s favorite car was originally valued by the London Stock Exchange at 5-billion pounds ($6.7-billion U.S.) and became the first British manufacturer in several decades to be listed on the market, making it only one of 2,600 companies from 60 different countries currently listed. Aston Martin was hoping to price its shares at £22.50 but had to readjust given mixed feedback from investors. Additionally, the 105-year-old luxury carmaker had a disappointing first day on the market.  Aston Martin shares are trading under the stock symbol “AML.” Overall 25% of its stock was sold. Company employees, consumers as well as investors were able to pick up some shares. It opened at £19 but dipped to £17.75 throughout the day. The first day on the market ended 16% below opening bell price. Most concerning was the fact that it took only about 10-minutes for the price of the share to drop. Even so, leadership within Aston Martin doesn’t seem concerned. Palmer stated it’s taken them over a century to launch an IPO, an accomplishment in its own, so he won’t worry about what the shares are doing on opening day, but rather he’ll focus and look at the long-term potential of an IPO. And perhaps he’s right. Ferrari had several terrible months after they launched their IPO and now, a few years later, they’re up triple digits.

Looking ahead, the company has some aggressive goals they’d like to reach by 2023. Here’s a few:

  • Produce 10,000 units yearly by 2020
  • Enter the SUV market with the DBX
  • Launch two electric cars and a mid-engine sports car
  • Manufacture a 25 Goldfinger DB5s car (yes, this will be a .007 silver birch car that won’t be street legal but will cost £2.75M
  • Begin production of its highly anticipated Vantage sports model

Regardless of performance, this was one of 2018’s most anticipated IPOs and it most definitively paves the way for more car makers to eventually enter the stock market. Analysts recommend watching its performance over the next 12+ months and keeping an eye on car makers like Jeep, Bentley or Lamborghini. Because if Aston Martin’s IPO performs, these other car manufacturers may feel encouraged to go public as well.

SOURCES:
http://europe.autonews.com/article/20150409/ANE/150409991/aston-ceo-calls-crossover-daimler-deal-keys-to-reviva
https://en.wikipedia.org/wiki/Aston_Martin_DB11
https://www.theguardian.com/business/2017/may/24/new-model-helps-aston-martin-to-double-revenues-in-first-quarter
https://www.theguardian.com/business/2018/aug/28/aston-martin-expected-to-unveil-london-stock-exchange-flotation
https://en.wikipedia.org/wiki/London_Stock_Exchange
https://www.theguardian.com/business/2018/oct/03/aston-martin-ipo-flotation-lse
https://www.motortrend.com/news/aston-martin-future-product-pipeline-2023/
https://www.thestreet.com/markets/ipos/will-aston-martin-ipo-result-in-163-gains-like-ferrari-14718779
https://www.marketwatch.com/story/aston-martin-ipo-values-james-bond-carmaker-at-56-billion-2018-10-03
https://www.bloomberg.com/opinion/articles/2018-10-30/elon-musk-isn-t-the-nothing-of-tesla
https://www.theguardian.com/business/2018/aug/28/aston-martin-expected-to-unveil-london-stock-exchange-flotation

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