viewAston Martin Lagonda Global Holdings PLC

Aston Martin backfires as it swings to a loss on huge IPO costs

Shares are at an all-time low after the British carmaker swung to a loss last year after splashing £136mln to join the London Stock Exchange in October

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Aston Martin Lagonda Global Holdings PLC (LON:AML) fell to a loss last year after forking out a massive £136mln to list on the London Stock Exchange.

After taking into account the hefty initial public offering (IPO) costs, the British supercar maker, made famous by James Bond, fell to a pre-tax loss of £68.2mln in 2018, compared with a profit of £84.5mln a year earlier.

READ: Aston Martin shares reverse as price declines cloud growth

Revenue rose 25% to £1.10bn from £0.88bn in 2017 after selling slightly more cars than it had expected to back in September, with demand from rich Chinese and Americans particularly strong.

The FTSE 250 company also said it had set aside up to £30mln to help it deal with any issues that might arise once the UK departs from the European Union.

“2018 was an outstanding year for Aston Martin Lagonda, delivering strong growth, with improving revenues, unit sales and adjusted profits,” said chief executive Andy Palmer.

“Our well-defined expansion plans, that combine outstanding high-performance cars with iconic brand-status, are on track as we manage through the uncertainties and disruption impacting the wider auto industry.”

Shares at all-time low

In October, Aston Martin became the first British carmaker in decades to float on the LSE.

It listed with a £4.3bn valuation – a figure which raised eyebrows in the City, especially given Aston’s history of bankruptcies and the fact that 2017 was the only profitable year this decade.

The shares, which were priced at 1,900p at the IPO, quickly went in reverse though, not helped by a third-quarter update which showed the average price of a new Aston Martin had fallen 7% year-on-year.

After falling another 15% today, the stock sits at 1,168p – a fresh all-time low for Aston and almost 40% below their IPO value.

In fact, the stock has performed so badly since listing that some in the Square Mile think it has led to other companies postponing their plans for the time being.

‘Abject failure’

“From an investor perspective, it’s been an abject failure,” said Jordan Hiscott, chief trader at Ayondo markets.

“This has been even more eye-watering for the company itself with the cost of £136mln to gain its public listing.

“Yet, given the good news of soaring revenue on a year-on-year basis to over £1 billion, and a 26% rise in car sales, that does seem like the move to all-time lows today is slightly overdone.”

“However, the contrarian in me also highlights that possibly the market doesn’t share the same confidence in forward guidance as much as Aston Martin does.”

Quick facts: Aston Martin Lagonda Global Holdings PLC

Price: 35.46 GBX

Market: LSE
Market Cap: £539 m

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