Aston Martin, of which cars were used by fictional British secret service agent James Bond, is planning to sell shares for $29.75 a piece in its initial public offering in London. This will place the company at a market value of $6.7 billion which is along the line of Italian luxury carmaker Ferrari.
A source familiar with the matter told Reuters there had been orders to take up all the stock that Aston Martin will be making public. The shares would start trading between Oct. 3 to Oct. 8 Reuters said.
Aston Martin sold more than 5,000 car units in 2017, its peak sales for the last nine years, CNN noted. The company's 2017 sales yielded $1.1 billion in revenue, doubling its profit around the same period in 2016.
The British carmaker has sustained its impressive sales for the first half of 2018. Its turnover for the first 6 months was in fact up by 8 percent over the previous year, increasing the company's income by 14 percent.
Analysts, nevertheless, believe investors may recoil from buying Aston Martin when they can buy Ferrari stock at the same price range. Another cause for worry is the Britains slated exit from the European Union next year which analysts believed could impact the auto industry through high tariffs and expensive price tags per units.
Analysts from Bernstein told CNN that Ferrari has a much stronger market presence than Aston Martin. The Italian brand has positioned itself as one of the world's top racing car, boasting numerous wins in Formula 1.
Bernstein analysts noted that demand for Aston Martin is lackluster compared to Ferrari. It's a stretch for the British carmaker to match the profitability presented by its Italian counterpart, the analysts said.
Analysts are also concerned about Brexit's tendency to slow car production with delays coming from the supply chains.
Indeed, Aston Martin's IPO prospectus seen by Reuters stated a warning that there could be a "significant adverse effect" on sales and profitability because 18 percent of its sales at present is coming from the EU. Furthermore, a majority of the company's supply chain is coming from the EU.
Arndt Ellinghorst of Evercore ISI said Aston Martin's pricing requires a great deal of confidence from prospective investors. He said his firm continues to flag Aston Martin's aim for ambitious capitalization rate.
Andy Palmer, Aston Martin's chief executive, said the company is very well-prepared for the impending impact of Brexit. He said the company has stockpiled sufficient engines and components supply before Brexit takes effect next year. Aside from this, Palmer believed that Aston Martin could take advantage of the market that Ferrari and other luxury car brands are set to lose in the U.K. market after Brexit.
