The IPO window opens and battery maker A123 Systems gets set to jump through
The financial crisis has been hard on IPOs, the initial public offerings that young companies use to start tapping the public stock markets for capital.
In the six months after Lehman Brothers went into bankruptcy, a grand total of two companies managed to go public. In December 2007, before the financial market meltdown, nine companies went public in a single week alone.
Right now, though there are five companies lined up to test the market for new stock offerings: Artio Global Investors (an asset management company), Seclect Medical Holdings (a hospital operator), Vitacost.com (an online vitamin retailer), Shanda Games a Chinese online computer game company), and A123 Systems.
It’s battery maker A123 Systems that interests me the most.
The stock has a good chance to move up by 10% or more on its first day of trading. (It’s not to late to ask your broker if you can get in on the IPO. But I think this one will be oversubscribed so your chances aren’t great. But, hey, it never hurts to check.)
This offering has been in the works for more than a year keeping investors who want to get in on the next generation of batteries on tenterhooks. (For more on why you want to invest in batteries see my Setpember 8 post “Batteries, yep good old batteries, are the technology of tomorow: Here’s how to invest” http://jubakpicks.com/2009/09/08/batteries-yep-good-old-batteries-are-the-technology-of-tomorrow-heres-how-to-invest )
And the A123 Systems IPO is being closely watched by a bevy of other “green” startups that have been waiting to go public. The venture capital industry has pumped a considerable amount of cash into this sector–in April A123 Systems raised $69 million in it’s most recent round of venture capital funding–and it has companies with technologies such as the smart-grid and networks for recharging electric cars ready to tap the public markets if the price is right.
The A123 Systems IPO is expected to price this week with trading to begin on the NASDAQ under the ticker AONE. Goldman Sachs and Morgan Stanley are the lead underwriters for the deal. The prospectus priced shares at $8.00 to $9.50. (The final offering price is set by the underwriters’ judgment of demand.) At a price of $8.75, the IPO wouild give A123 Systems, a company still reporting losses, a market capitalization of about $880 million. Exisitng investors are selling relatively few shares, 680,000 out of approximately 26 million.
Is there any way to know when A123 goes to the open market?
e_: It looks like nobody knows for sure, but some people point to Oct. 10.
Jim, is there any way you can provide an evaluation of A123? It does belong to a potentially “hot” industry, but the major components for their battery are coming from China, and we should see a lot of competitors from China in this segment soon.
I have been following this for a few years. There is competition already from China, but the cells by A123 are definately superior. They are able to deliver better current, and it seems that they will last longer. I do not know that the “major components” come from China. The technology behind their battery is the reason for the current differences compared to the Chinese using the same chemistry.
BTW, these batteries are are at least the near future. Well taken care of, they can do more than 2000 charge/discharge cycles and have a very good weight to capacity ratio. For a daily comuter, that is approaching the life of the car.
http://online.wsj.com/article/BT-CO-20090922-703279.html
“Estimated Price For A123 IPO Boosted To $10-$11.50 Each”
A123 Systems, Inc. has priced 09/23/2009 8:19:00 PM
The final offering price for A123 Systems has been set at $13.50. The number of shares offered was 28,180,501. If you have placed a Conditional Offer to Purchase, please refer to the Offer Status and Affirmation tab to affirm your Offer.
Started trading this morning at $17.
Welcome back to a real world! Today AONE hit 15.90, which is below its price on the first day of trading. It was pretty obvious to me that it should happen soon or later, I just didn’t expect it to happen so fast.
today A123 hit 14.25, Jim do u think it’s a nice entry point for a long term hold? or we don’t hold anything long term in US?
i am no financial expert. But loss of 6.34 per share, price to sales ratio of 15, current ratio of 10. ROE is not good. Margin seems awful. I wonder what justifies the price of the stock. I would guess its the mutual funds buying this stock. Who cares if they lose the money !! Loss goes to the ppl who bought those funds…am i too pessimistic??
Jim what do you think of AONE at present?
Today it was trading in the Mid $12 range which is 35% below the price it had when you added it to the watch list.
What other information do we need to know in order to determine a proper entry point?
Is this a wait and see kind of situation?
Idea for company sounds good on paper. But financial numbers don’t look good at this point. However, they are getting Federal grant money.
The stock has cratered but can always go lower. Unless you have insider info that their ship is coming in soon, appears to be a risky investment at this point in time.
bought some a123 during yesterdays carnage
Pulled the trigger at 6.37. This company has 350 million in cash and very little debt.