The Sunday Times On SpaceX
I have already written my weekly article and produced my charting video for the weekend. So today’s article is something of a bonus. It was inspired by Oliver Gill who is Deputy Business Editor at the Sunday Times. He notes that there have only been seven UK floats so far this year. So we’re half way through the year and just over one a month. Maybe there’ll be 10 or 12 by the end of the year, who knows? But in the current environment obviously blighted by the Iran situation.
So to be fair to the London market that was and has been a factor. The situation still seems to be a bit of a tumbleweed one in terms of companies coming to market. This is despite or perhaps because of all the virtue, signalling by those who run the London market and who work in it that things are going to be much easier for companies not only who are listed already but who wish to list.
Fluttering Off
And the red tape and the costs and everything else are going to be sorted out. Obviously so far we haven’t seen much evidence of that. In fact we tend to have seen companies running from the hills. The latest one I think in the last few days was Flutter, which has decided that rather than having a dual listing, New York and London, why not dispense with the London one?.
So that is a direct kick in the teeth as far as the merits of being listed in London. Presumably some of this has been affected by the Labour government which nearly two years into the saddle now has ratcheted up the tax levels on capital gains, been stingy on ISAs. So that isn’t a very helpful thing. And as well as that there has certainly not been any direct or helpful or significant way of, or methods of making being listed easier or more pleasant.
And obviously once you are listed that’s when all the service providers, kick in (corporate advisers, lawyers, accounts, auditors, exchanges). I notice that Mr. Gill even mentioned public relations firms who he says flourish when the London bourse is doing well. Well apparently according to him they flourish very well all the time. Clearly if they don’t have enough companies to do their PR on, perhaps they don’t do so well.
But going into that area – PR it would appear these days all you need is a a laptop and a website and you’re automatically a world beating PR company.So that is something to take note of. CEOs these days are spoilt for choice in terms of which high pressure salesperson they go for and what kind of result they’ll get. But getting back to the UK IPO, UK float situation.
The message from Mr. Gill, was that the SpaceX float, which values the company at some $2 trillion, making Elon Musk a trillionaire in total, will inspire people in London too, and companies to go forward and list and have a big blockbuster IPO.
Aston Martin
Unfortunately, probably, the closest we got in recent history was the Aston Martin IPO, which actually was probably one of the most disastrous ones ever seen. An Initial float price of £5 billion. And I don’t look now to see what the market cap is exactly at the moment, but it’s a fraction of that (£427m). That was one of the biggest disasters. Even though we had the James Bond connection and we had a market which should have been relatively benign and positive in terms of Aston Martin. So having a big name, or even having a big name in terms of a brand, or even a big name in terms of an entrepreneur, doesn’t necessarily mean that the London market is going to offer us up the next kind of SpaceX situation.
The Magnificent Seven
In fact, it’s difficult to see how SpaceX, or obviously Facebook or Meta as it’s called now, or any of the other tech companies that have the Magnificent Seven would ever get the valuations that their US equivalents have. In London you tend to be half or quarter or a tenth the valuation that you do in the US. There just isn’t that gung ho spirit, there isn’t that enthusiasm, there isn’t that liquidity overall.
A Very British Mentality
But I do think it’s still the mentality that there are only a very few people in this country who even have a fraction of the entrepreneurial and gung-ho spirit that Elon Musk has. And coming up with the ideas that he has over the years, Tesla, PayPal, SpaceX, and the like. There is nobody in this country who has that attitude. And if they have that attitude, they leave the country and go to America and do everything that he’s doing over there.
There is a long way to go and we still haven’t got rid of that key scratching of the Rolls Royce mentality that we have here in this country, tend to go into a sulk or be jealous or envious of other people’s success or even people who want to be successful. It tends to be a dirty word. So maybe there will be a 2 trillion pound or 2 trillion dollar equivalent float in the UK sometime in the future. But at the moment it looks like it’ll be well beyond 2050 or even 2100 when inflation means that that’s not a lot of money at the moment, I’m afraid the hopes of Oliver Gill look to be a little bit wide of the mark and maybe a little bit over enthusiastic, in terms of just being wishful thinking.
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The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
