Original post:
The stock closed at $20.29 up $6.79 (50.30%). As I said this morning in "A123 Systems jolts IPO market (AONE)":
I don't have an interest in IPO's in general (all the allocation shenanigans, quid pro quo, etc.) but would be remiss if I didn't at least mention this one...Don't let my proclivities spoil the fun, here's some of the better first day reporting:
First up, representing the Dow Jones blog empire (Heard on the Runway is must read during Milan Fashion week), Environmental Capital:
Cleaning Up: Is A123 System’s Explosive Stock-Market Debut The Real Deal?
From Bloomberg:...Is this the beginning of the green tech revolution or a reprise of the tech bubble?
Let’s take a look under the hood, as it were. A123, based in Cambridge, Mass., makes batteries that power hybrid and electric cars, among other things. The market for electric cars could be potentially huge, since the U.S. and other big economies want to wean themselves off oil and curb greenhouse-gas emissions.
How huge is anybody’s guess. Actually, it’s A. T. Kearney’s guess—A123 used to use market forecasts from Lux Research, but those were fairly conservative. So since this summer, A123 has been relying on Kearney forecasts of the market for lithium-ion batteries for electric cars: $32 million today, but poised to grow to $21.8 billion in 2015 and $74 billion in 2020.
That might very well be the case. Or it may not—as A123 points out in its prospectus, the world is a fickle place. Oil and gas prices might get cheap and stay there, eroding demand for electric cars. Political will—so important to support the not-yet-cost-competitive electric-car market—could evaporate. Somebody else might invent the next big thing. And so forth.
Actually, as A123 notes, its real fears are more pedestrian. It does a lot of manufacturing in China, where intellectual-property laws are lax. Its rivals are better-funded, and have deeper relationships with carmakers that plan to use the batteries. Staying competitive on costs will be a challenge, especially since China has jumped into the battery business with both feet....MORE
A123 Surges in First Day on Electric-Vehicle Demand
From the hometown paper, the Boston Globe:...The initial public offering came 14 months after A123 filed to sell shares amid the worst market for venture capital-backed startups in nearly 40 years. Investors were enticed by an electric-vehicle market that may expand 700-fold in six years, said Matt Therian, an analyst at Renaissance Capital LLC.
“What’s attracting investors is an end market that’s expected to grow so quickly,” said Therian.
A123 received $13.50 a share in the IPO after raising its sale price twice this month. A123’s offering was initially priced at $8 to $9.50 share. The funds will help build a factory for lithium-ion car batteries in Michigan, the company said today in a securities filing.
The global market for electric and hybrid electric vehicles was forecast to surge to $21.8 billion by 2015 from about $31.9 million this year largely because of government incentives, according to analysis by A.T. Kearney.
Government Aid
“The government is feeding the whole food chain for electric vehicles,” said Theodore O’Neill, an analyst at Kaufman Brothers in New York.
A123 is expanding U.S. manufacturing of automotive batteries in a market dominated by New York-based Ener1 Inc. and Milwaukee-based Johnson Controls Inc., O’Neill said. He has a “buy” rating on Ener1 and doesn’t yet rate Johnson Controls or A123.
A123 last month was awarded $249 million in federal stimulus grants out of $2.4 billion the Obama administration is spending on electric vehicle development. Recipients of the grants agreed to match the federal investments.
“We think Ener1 is way ahead of A123 in that they already have U.S. manufacturing,” O’Neill said.
A123 currently doesn’t get any revenue from the prismatic battery technology that automakers favor, Renaissance’s Therian said. “It’s a highly competitive space and they’re not the only one trying to build a prismatic battery.”
Foreign Competitor...MORE
Shares in A123 IPO hit $20.09 in afternoon trading
..."It's going to give us the capital that we need to expand the business and it's going to provide comfort to our customers," said A123 Systyems chief executive David Vieau.
In the past, he added, customers have questioned whether the company had the "firepower we needed to scale up our battery," Vieau said. "And we just demonstrated that we do."
The shares began trading today on the Nasdaq Global Market under the ticker symbol "AONE," the company said in a press release.
The company now will almost certainly exceed the $250 million minimum it was hoping to raise with its first public offering offering of stock. At least a portion of the money raised will be used to match government funding, including a $249.1 million stimulus grant awarded to A123 Systems by the US Department of Energy for a manufacturing plant in Michigan.
A123 Systems has received more attention as interest in advanced battery technology has grown, spurred by last summer's high oil prices, as well as growing concerns about global warming and energy independence.
The company's initial public offering is considered by some as a bellwether for how successful the emerging advanced battery industry will be as companies expand production of lithium ion products meant to power everything from cordless power tools to cars and the electric grid.
Bruce Harrison, an automotive consultant at Lexington forecasting firm IHS Global Insight, said that the industry's success as an alternative power source for cars depends on several factors.
"One, the cost has to come down for these batteries," Harrison said. "Second, the power density has to increase to the point where the application of a battery means the vehicles operate similarly to the way an internal combustion engine does -- meaning, you can get 300 miles out of them [before recharging]."
Update: Here's part II of the roundup:
A123 IPO Roundup II (AONE) "A123 in Talks to Settle Lithium Battery Patent Fight "
