What's going on?
On Wednesday, British luxury carmaker Aston Martin announced plans to “go public” – potentially valuing the company at over $6 billion. Vroom.
What does this mean?
James Bond’s favorite car brand’s winding road through problematic products and financial troubles appears to have turned a corner. Last year, it had sales of over $1 billion – with more cars leaving the showroom and hitting the road than in almost a decade (tweet this). And in the last six months, Aston Martin grew its sales by 8% and profit by 14%, compared to the same time last year.
Why should I care?
For markets: Luxury cars are off to the races.
Investors will likely compare Aston Martin to luxury car competitor, Ferrari, as they decide how much they’re willing to pay for one of its shares. Ferrari’s stock changes hands at a price 36 times greater than the profit per each one of its shares (and there are almost 190 million of them) – versus an average of around 7 times for other European car companies. Ferrari’s valuation is in a similar ballpark to luxury bagmaker Hermès (which sells bags that can fetch as much as $300,000), so Aston Martin will probably hope investors see its cars as befitting of the luxury moniker (and valuation), too.
The bigger picture: Tesla’s Chinese competition revs its engine.
NIO – a Chinese competitor to Tesla (it’s staying a public company, by the way), which counts internet behemoth Tencent among its backers – also announced its own plans for an initial public offering on Wednesday. It’s likely to be valued at over $8 billion and plans to use the money for further research to develop and improve its products, as well as for marketing to win the battle for your electric footprint. Not to be left in the dust, Aston Martin’s got electric vehicle plans of its own – the rubber on its newest model is expected to hit the road in 2021.