45 percent price increase: Auto1 hurtles on the trading floor

Thursday, February 04, 2021

45 percent price increase
Auto1 is racing on the trading floor

The online used car dealer Auto1 shone when it went public for the first time this year – in early business, the price was well above the issue price. According to analysts, the timing is well chosen: After all, stationary car dealerships are currently having major problems.

The Berlin online used car dealer Auto1 ignites the turbo on its stock market debut. In the morning on the Frankfurt floor, the price board lit up 55 euros – an increase of 45 percent over the allotment price of 38 euros. The operator of "wirkaufendeinauto.de" was valued at almost twelve billion euros. Auto1 got off to a brilliant start to a stock market year from which investors are still hoping for a lot, and at the same time managed the largest new issue since Teamviewer around a year and a half ago. Vodafone's radio mast subsidiary Vantage should follow in March and then probably take the title of the largest IPO of the year from Auto1.

"We are totally happy. That shows how much trust we have built with old and new investors," said company boss Christian Bertermann. There is a "better way to buy a car – online". DN Capital also agreed, the first institutional investor to put money into the then one-year startup in 2013. The two founders Bertermann and Hakan Koc had "significantly" reduced the pain points when buying a used car for consumers and dealers. Nevertheless, there was no big celebration. "Everyone has got a glass of champagne and is back to their table with the FFP2 mask and drinks there alone," Bertermann revealed and assured that a party would be rescheduled.

Company founders turn part of their stock ownership into money

The Japanese technology investor Softbank remains the largest shareholder even after the IPO. The company founders Bertermann and Koc, on the other hand, turn part of their shareholdings into cash. A good 23 percent of the shares will in future be in free float. The US anchor investors Sequoia and Lone Pine alone subscribed for shares for 300 million euros. Bertermann is also hoping for "one or the other advice" from the latter – especially with a view to the US competitor Carvana, which is now worth around 50 billion dollars on the market. From the issue volume of 1.83 billion euros, the newcomer receives one billion euros, the rest goes to the existing shareholders.

In addition to the repayment of a convertible loan, the company, which is active in 30 countries, wants to use it to expand and make better known AutoHero – the brand for the online direct sale of cars to private customers, to hire new staff and to put money into glass vans. AutoHero is developing beyond plan, Bertermann said of the deal, in which Auto1 offers buyers of a used car a 14-day money-back guarantee and a one-year warranty. In the fourth quarter, sales climbed by 75 percent compared to the previous quarter. Over the year as a whole, 10,200 vehicles were delivered. The scaling is increasing significantly, assured Bertermann.

Digitization also found its way into the used car trade

AutoHero got through the Corona crisis better than the bread and butter business – buying cars from private customers and reselling them to dealers. In 2020, total sales fell by a fifth to 2.8 billion euros. Bertermann did not want to give any insight into the goals for the current year, but spoke of an "ambitious business plan". Because of the investments, Auto1 is unlikely to end up in the black. So far, the company has only managed to do this on a quarterly basis. Adjusted, the operating loss last year was a maximum of 15.8 million euros.

In any case, analyst Konstantin Oldenburger from CMC Markets is not worried about Auto1. Digitization has now also moved into the used car trade. "Gone are the days when you first had to personally inspect a car on site." Auto1 has found a niche and the attractive business model can now also inspire investors, said Oldenburger. Auto1 will obviously not be the only listed internet dealer in Germany for long. According to insiders, the Mobility Holding (meinauto.de) run by the former Sixt Leasing CEO Rudolf Rizzolli is already in the starting blocks.