US Markets
Thursday, February 1st, 2024 6:09 pm EDT
Key Points
- Amer Sports, the Finnish athletic company, made its debut on the public markets at $13.40 per share, trading under the symbol AS on the New York Stock Exchange. The IPO was priced at $13 per share, raising $1.37 billion, down from the initial plan to offer 100 million shares at $16 to $18 each. The discounted IPO values Amer at around $6.3 billion, compared to the earlier valuation of up to $8.7 billion.
- Amer Sports’ decision to discount its IPO was influenced by Federal Reserve Chair Jerome Powell’s indication that rate cuts were not imminent, impacting market sentiment and contributing to the struggles of the IPO market, which Wall Street has been eager to see make a resurgence. Recent IPO debuts, including that of German shoemaker Birkenstock, have been lackluster and failed to impress.
- Despite running well-known athletic brands like Wilson and Arc’teryx, Amer Sports faces financial challenges with a balance sheet burdened by $2.1 billion in debt. The company did not post any profits between 2020 and September 2023. In the nine months ending September 30, 2023, Amer generated $3.05 billion in revenue, up from $2.35 billion in the same period a year earlier, but it reported a net loss of $113.9 million during this timeframe. The company’s increasing reliance on the Chinese market, which accounted for 19.4% of sales in the nine months ending September 30, raises concerns amid rising tensions between the U.S. and Beijing. Despite these challenges, Amer derives nearly half of its revenue (40%) from the Americas, with 33% coming from Europe, the Middle East, and Africa.
Amer Sports, the Finnish athletic company known for brands like Wilson and Arc’teryx, made its debut on the public markets with its IPO priced at $13 per share, raising $1.37 billion, and trading under the symbol AS on the New York Stock Exchange. Despite initially planning to offer 100 million shares at $16 to $18 each, Amer decided to discount its IPO, valuing the company at approximately $6.3 billion, down from a potential $8.7 billion. This decision was influenced by market concerns following Federal Reserve Chair Jerome Powell’s indication that rate cuts were not imminent, affecting overall market sentiment and impacting the IPO market’s performance.
While Amer Sports manages some of the most prominent athletic brands globally, its financials reveal challenges. With a balance sheet burdened by $2.1 billion in debt, the company reported no profits between 2020 and September 2023. In the nine months ending September 30, 2023, Amer generated $3.05 billion in revenue, marking an increase from $2.35 billion in the same period a year earlier. However, it posted a net loss of $113.9 million during this timeframe, up from the $104.4 million loss in the corresponding period the previous year.
Concerns also arise due to Amer’s increasing reliance on the Chinese market, especially amidst rising tensions between the U.S. and Beijing. In 2020, 8.3% of Amer’s business came from Greater China, which nearly doubled to 14.8% in 2022. In the nine months ending September 30, 2023, sales from the region constituted 19.4% of Amer’s total. However, the company still derives nearly half (40%) of its revenue from the Americas, with 33% coming from Europe, the Middle East, and Africa. This diversification in revenue sources might mitigate the impact of potential disruptions in the Chinese market.
Amer Sports’ IPO adds to the recent trend of underwhelming market debuts, reflecting the cautious sentiment prevailing in the IPO market. Despite the challenges, the company’s recognizable athletic brands and diversified revenue sources could position it strategically in the market, allowing for potential growth and adaptation to evolving market dynamics.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/01/amer-sports-ipo-wilson-tennis-racket-maker-to-trade-on-nyse.html
