By David Sachs
Renault shares rose Tuesday on the French carmaker’s decision to cancel plans to list Ampere, its electric-car unit.
At 0823 GMT, shares of Renault were up 1.7% at EUR34.90 after rising as high as EUR36.03.
Current market conditions are unsuitable for an IPO, the company said late Monday. Analysts and investors had long questioned the wisdom of an initial public offering given the prospect of diluting Renault stock and uncertainty around demand for electric vehicles.
The spinoff’s strategy of lowering EV costs with engineering, software and manufacturing processes is solid–as its funding– without an IPO, Jefferies analysts said in a note.
“An organic solution also avoids distracting management at a critical time for the industry and enhances management credibility on capital allocation,” Jefferies analysts said. “While current pure EV valuations made an IPO unattractive, reaching a low point in negative EV sentiment provides upside to Renault shares.”
Bernstein analysts said the decision to keep Ampere unlisted removes a hang-up for current and potential investors, triggering a short-term boon but also honing focus on Renault’s 2024 guidance in a year with slower growth expectations for electric cars and the auto industry as a whole.
“Investors are now likely to focus more closely on Renault’s 2024 guidance, and we would expect sell-side estimates to face pressure in upcoming weeks,” Bernstein analysts said. “But overall, Renault remains well positioned and continues to execute well on its strategy.”
Renault had planned the IPO for this spring.
Write to David Sachs at [email protected]
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