Aston Martin slow off starting block

Andy Palmer has spent a good part of his time at the helm of Aston Martin spreading the word that the sports-car maker should command the high valuations of its rival Ferrari NV, and slapping the U.K. brand on yachts, upscale baby strollers and even submarines.

By the start of trading Wednesday on the London Stock Exchange, the CEO had largely succeeded. Aston Martin was priced at 19 pounds (US$24.69) a share in an initial public offering, on par with Ferrari’s lofty profit multiples. But by day’s end, the stock had slipped 4.7 per cent — proving Palmer has a lot to do to convince investors of his vision for the Gaydon, England-based firm.

“We’ve taken 105 years to get to an IPO, we are not going to worry much on what the initial shares are doing,” Palmer said in an interview. “We will always look over the longer term.”

Analysts were never so sure that the comparison was warranted. Ferrari is more profitable and has a stronger balance sheet, generating piles of cash. Palmer had spent the final two weeks before the IPO in a sprint, pitching the deal to more than 350 investors across the globe. But as the stock listing approached, it became clear the upper end of the original target of 22.50 pounds — which would have valued the company at a Ferrari-topping 5.1 billion pounds — was out of reach.

“They priced it pretty well, getting that valuation,” said Arndt Ellinghorst, an analyst at Evercore ISI in London. “For now, there is very little left until people see some numbers and are willing to take more risk.”

Palmer, rubbing his eyes from exhaustion yet retaining a jovial disposition, pointed out that Ferrari lost 38 per cent in its first four months of trading. It’s long since recovered, and is up 36 per cent this year to a US$25.8-billion market value, despite uncertainty from trade wars, a softening of markets in China and the U.S., and the death of former CEO Sergio Marchionne.

“Just remember what happened to Ferrari when they listed. There was a lot of volatility there,” Palmer said.