Talk Morgan Forums Community The Malvern Arms Aston Martin shares.

A scary end to the week for Aston Martin shareholders, with yet more wiped off the share price because of the high flotation costs. The stock has now lost over 40% of it's value since flotation at the beginning of October.

I looked at the offer at the time of the float; the share price set at the time was over 60 times earnings. Seemed nuts to me, particularly for shares in a company that has seldom made any money for anyone over it's long history, and also set against a background of uncertainty throughout the whole automotive sector.

In any case, I wish AM well, but can't help feeling that it's the sort of company that's better suited to private ownership.

£136M in flotation costs with half of that for management and staff share incentives

Somone has made a killing and with the share price tumbling, the incentives might not be worth that much

I remember talking to a company boss a few years ago about his floatation

The costs just escalate to frightening levels and they were duped into signing away cost after cost on legals and financials because they know that they’ve got you by the balls with the knowledge that if you don’t agree to everything you won’t get your huge payout

He said although it made him a lot of money, he witnessed capitalism and greed at its worst

Risky business!
When working for Gallaher Tobacco we had a share save scheme that was a totally different scenario re risk.
Essentially you were guaranteed a “bonus” of 5%+ on contributions at the end of the term. So it was equivalent to good savings rates.
On maturity (3,5 or 7 years options) you could
a) just withdraw the cash (tax free)
b) buy shares at an agreed value at your start date (including a discount)
c) sell immediately
d) keep and get dividends and sell at a future date.
As the share price was gojng up and fairly safe to do so there was extra profit there too.
It was a low risk savings plan for 3,5,7 year fixed terms and a good way to save for future purchases of cars, larger items etc..
I still had shares when they were bought out by Japan Tobacco and gained more profit there. It is a different scenario now with the downturn in tobacco revenue!
Gallaher were a VERY profitable concern and benefits to match, including profit share. AM are not in the same league.

It's sad to see a company which had potential forced to waste such huge sums on legal nonsense that few if any investors read.The UK is a land fit for lawyers