The online used car dealer Auto1 has had a difficult time on the stock exchange despite rapid growth. The paper, which has been listed on the financial market since February, recently fell to a record low – even though the sales forecast for the current year was increased again and the analysts are mostly optimistic. What drives Auto1, what analysts say and what the stock does.
That’s going on at Auto1
The Berlin-based company founded in 2012 with the brands Autohero and wirkaufendeinauto.de benefits, among other things, from the fact that car manufacturers are producing less due to a lack of chips. This is driving up used vehicle demand and prices. In addition, Auto1 is way ahead in the digitization of the used car trade, which still rarely takes place on the Internet.
For this reason, the management around company co-founder and CEO Christian Bertermann was able to present the figures for the third quarter in mid-November again raise the sales forecast. The proceeds should climb to 4.5 to 4.6 billion euros in the current year. In 2020, the company had earned 2.8 billion euros.
Because of the investments in expanding the business, Auto1 remains in the red. On the basis of earnings before interest, taxes, depreciation and amortization (Ebitda) adjusted for special effects, the group is aiming to break even for the first time in 2023, as CFO Markus Boser confirmed in an interview with the financial news agency dpa-AFX last week.
The company has not yet given a forecast for the coming year – this is planned when the 2021 balance sheet is presented. Boser simply said that he was comfortable with the expert assessments gathered at Bloomberg. At the time, sales in the coming year had increased to 5.9 billion euros with an operating loss of a little more than 90 million euros.
Auto1 operates an online trading platform through which car dealers in more than 30 countries can buy and sell used cars. Around 560,000 cars are expected to change hands this year via this platform. With this wholesale business, Auto1 is doing the biggest deal so far under the same name. A total of around 600,000 cars are to be bought and sold this year via the company’s platforms. That would be a third more than in 2020.
The company wants to grow in the future with its own dealer Autohero, which is aimed at private interested parties. Auto1 wants to boost this business with a lot of advertising. In 2021, up to 42,000 used cars are expected to be sold in this segment, compared with just 10,000 last year. Those interested in private customers can have their car delivered directly to their home or to a suitable pick-up station nearby.
Private car sellers can sell their vehicle at more than 400 drop-off points in Europe at a price previously set online. In addition, Auto1 wants to significantly expand the capacity of its workshops, which process used cars for sale, to up to 400,000 units in 2023.
The group is currently trying to increase its awareness through football sponsorship, among other things. Auto1 has been featured on the front of the shirt of the Hertha BSC Berlin soccer club since this season and is also a partner of Paris Saint-Germain. In addition, Auto1 is expanding its fleet with trucks that deliver the cars in trailers with transparent glass panes to the customer’s front door.
That’s what the share does
After the share had initially responded positively to the increased sales target, the air was quickly out again and the price fell on Thursday to a record low of 25.20 euros – since the presentation of the figures for the third quarter and the increase in sales forecast, the MDax has lost Paper around a fifth in value.
This accelerated the downward trend of the past weeks and months. Since the spectacular IPO with high subscription profits, the paper has gradually lost value: From the issue price of 38 euros, it went up to almost 57 euros on the first day of trading at the beginning of February. But the euphoria has long since vanished – at less than 26 euros most recently, the price is almost a third below the issue price and more than half below the record high.
The group currently has a market capitalization of around 5.5 billion euros on the stock market balance. This means that Auto1 is only in the middle of the 50 MDax values - at the time it was promoted to the little brother of the leading index Dax, the company was still in the upper MDax middle field with just under eight billion euros.
The largest shareholder is the Japanese technology investor Softbank, which, according to Bloomberg data, holds around 16 percent of the shares. The two founders Christian Bertermann and Hakan Koc therefore each hold just under 13 percent. Bertermann heads the company, while Koc has since retired to the supervisory board.
That’s what the analysts say
For the analyst guild, the latest share price development is a disgrace. The four of the five experts recorded by dpa-AFX, who have spoken out since the sales forecast was raised, confirmed their purchase recommendation. In some cases, the price target was also increased – here the average is just under 50 euros, which is almost twice as high as the current price level.
The situation is similar with the twelve analyst assessments that were collected by the Bloomberg news agency. Eleven of them give a buy recommendation. The average target price is a little more than 50 euros.
The highest target price comes from the Canadian bank RBC at 70 euros. The sales, gross profit and adjusted operating profit (Ebitda) of the online used car dealer exceeded expectations, wrote analyst Sherri Malek in a study published shortly after the figures were announced. The increased annual targets also left scope for the analysts’ estimates.
Alsterresearch analyst Oliver Wojahn currently has the lowest target price of 37 euros. He believes the recent price slide is exaggerated and therefore upgraded the stock from “Hold” to “Buy” in the middle of this week. He sees the company as well positioned to grow quickly – but that continues to cost money. Therefore, according to his assessment, Auto1 will only reach the operating breakeven point in 2024.
Most recently, Metzler expert Tom Diedrich remained positive after the figures for the third quarter. He confirmed his buy recommendation and increased his price target by one euro to 47 euros. The company was one of the biggest beneficiaries of the European used car boom, he wrote in a study. The Deutsche Bank analyst Nizla Naizer sees a similar view. (dpa / swi)
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