Aston Martin’s $6.5 Billion IPO: Good Timing For Who Exactly?

Aston Martin is riding Ferrari’s bumper with its proposed IPO launch that values the company at around $6.5 billion.

It’s on track to sell between 6,200 and 6,400 cars this year, with projected sales of around $1.26 billion…

So, that looks like a monster valuation, at around five times sales and as much as 60 times earnings, which are only forecast at $113 million this year.

Still, on closer inspection, it’s obvious that Aston and the ultra-luxury market is on a roll and the company’s looking to expand into Asia more aggressively with projections of selling 7,200 or 7,300 cars in 2019.

There’s good reason that this sector is doing so well, although it is hypersensitive to the economy, especially this bubble economy.

In July 2008, I was interested in the new, really sexy, two-door Maserati coupe. I went to the dealer and he told me to put down a deposit that same day to ensure I got one. They were backordered for months. And, of course, I was lucky he “wasn’t charging a premium.”

That was a warning signal to me as the stock bubble back then was already starting to burst.

So, I waited.

I went back to that same dealership in February 2009, just seven months later, when the stock market was bottoming. I got the car with a 25% discount! I got the dealer AND manufacturer’s margin as savings.

Obviously, the high-end car market does very well when the rich are doing well, but that can reverse quickly.

I can see the shape of this luxury car bubble even more clearly from the major updates we are doing to our Spending Waves book, that will be ready for you in October.

The bubble boom, especially since 1995, has made the older and the most affluent richer because they own most of the financial assets that are bubbling.

In turn, cars, especially the luxury segment, are one of the most responsive to bubbles and a strong economy.

Look at the change in where auto spending peaked between the 1996-1998 period and the 2014-2016 period more recently.

1 2
View single page >> |

Follow me on Twitter @harrydentjr

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.