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Aston Martin – engines on and shares up for grabs

Laith Khalaf
uk car

Investors can buy 7,500 shares for the price of a typical Aston Martin. Aston Martin looks like it will sit at top end of the FTSE 250. Contributor Laith Khalaf, Senior Analyst – Hargreaves Lansdown.

Aston Martin has announced the price range for its forthcoming IPO at between £17.50 and £22.50 per share, which would give the company an equity market value of between £4.02 and £5.07 billion. That would put the company towards the top end of the FTSE 250, making it around the same size as Marks and Spencer, Severn Trent, and Royal Mail.

Based on a mid-price of £20, and an average selling price of Aston Martin’s core models of £150,000 in 2017, that means investors can buy 7,500 shares for the price of a typical Aston Martin vehicle. We expect a high degree of investor interest when shares start trading on the market, over 40,000 retail investors have signed up for updates on Aston Martin through our IPO information service.

Aston Martin looks like it’s going to have a high position on the starting grid when it comes to its FTSE ranking. A £5 billion valuation would put it fender to fender with the likes of Marks & Spencer, Severn Trent and Royal Mail, and sporting perhaps just a touch more glamour to boot. That’s assuming it ticks all the necessary boxes to make it into FTSE Russell’s UK indices of course.

Aston Martin has a chequered past, having gone bust seven times in its 105 year history, though recent performance seems to be turning a corner. The luxury car maker is looking to ramp up production, expanding into the SUV market and building its presence in China.

The key to success will be increasing the number of models on the road while maintaining the exclusivity of the brand. On that front, having the world’s most famous fictional spy as a brand ambassador is an asset most marketing departments can only dream of.

Investors will be able to buy around 7,500 shares for the typical price of an Aston Martin, and unlike a luxury car those shares can be stored in a pension or ISA, rather than a garage, for safekeeping. Unfortunately private investors won’t be able to participate in the IPO, but they will be able to buy shares on the market when they start trading in early October.

It’s important for potential investors to concentrate on the company’s long term financial prospects and not to get carried away by the brand however. That means having a thorough read of all relevant information the company is producing as part of its float, and only investing if they are happy with all the risks involved.

When Ferrari listed on the stock market is was priced at $52 per share. The share price faltered in the first five months, falling by around 38 percent. It has since rallied to around $135, though this serves to highlight that just because a well-known brand launches on the market, share price movement on flotation is always a two way street.’

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