It’s Official: A123 Systems Files for IPO
A123 Systems is the maker of advanced lithium-ion cells which are being tested for use in the Chevy Volt.
Most analysts agree that the lithium-ion battery market for electric cars will be massive could be on the scale of tens of billions of dollars. A123 already has significant leverage due to their unique technology and partnerships not only with GM but many other automakers as well.
After several weeks of rumors, A123 has publicly reported that they have filed for an IPO, or initial public offering of their stock. Could this have anything to do with GMs choice of battery suppliers?
So like they’re saying in China today, let the games begin.
Source (A123 )
And here is the full SEC filing, filled with details about A123s technologies and capacities (Link )
Thanks to stealthcaveman in our forum for the tip!
[UPDATE: If and when the stock gets listed it will trade as "AONE"]
Popularity: 4%
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- Get Ready for the A123 Systems IPO
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- New Chevy Volt A123 Systems Battery Interview
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65 Responses to “It’s Official: A123 Systems Files for IPO”
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August 8th, 2008 at 10:38 am
Sweet!
August 8th, 2008 at 10:40 am
Time to fire up scottrade.com!!!
August 8th, 2008 at 10:50 am
#2 Ed H
“Time to fire up scottrade.com!!!”
You might want to check out the pricing structure first, hehe. Looks like they are trying to raise about 175 million.
Nothing to do with anything…but do you think they filed today because they are Chinese based. This is after all the ‘luckiest’ day in a decade 8/8/08, lo.
August 8th, 2008 at 11:02 am
Nice. They can raise some money and A123’s operations will be more visible. It will be interesting to see how the first day goes…
August 8th, 2008 at 11:08 am
Statik,
Maybe after the IPO you’ll see some bulldozers.
Be well,
Tag
August 8th, 2008 at 11:22 am
May be GM has indeed selected A123 for Volt and may be thats the reason A123 is going for IPO to fund the expansion of A123 manufacturing facilities. As we all know, who ever wins the Volt contract will be the largest Li ion manufacturer in the world.
Food for thought ?
August 8th, 2008 at 11:28 am
This will be one of the worst kept secrets. I wonder if the IPO will come before we know whether or not they have the big contract with GM. And if so, are they timing it that way on purpose?
By the way, A123’s manufacturing is in China. They will certainly need to raise capital if they intend to manufacture in North America.
August 8th, 2008 at 11:43 am
Or the opposite is true and A123 did not get the bid and so they are trying to raise money now to fund manufacturing while speculation still exists.
August 8th, 2008 at 11:44 am
Hmmm. Kinda makes you wonder about GM’s recent statements that they may bring battery work “in-house” doesn’t it? Maybe this means that A123 isn’t GM’s choice after all?
August 8th, 2008 at 11:44 am
Filing for an IPO and having an IPO are distinctly different. Lots of filings get postponed and some never come to fruition.
As for subscribing, that’s invariably a sucker’s game. The return on IPO’s invariably trail the market returns in the 12 months after the offering.
The filing does, however, offer some support for the notion that they expect to be awarded the contract. Moreover, if they were, and if in order to get the K they had to agree to bear the cost of the production line, then they’d need the cash generated by the IPO to fund the line.
August 8th, 2008 at 11:44 am
txkenny types exactly 1 minute faster than me!
August 8th, 2008 at 12:05 pm
This news practicly seems like “A123 Systesms chosen for Volt battery supplier” was just posted. I dont really know what a IPO is so I have no clue.
August 8th, 2008 at 12:05 pm
#8 tkkenny - “Or the opposite is true and A123 did not get the bid and so they are trying to raise money now to fund manufacturing while speculation still exists.”
A123 will have to do a road show and all that jazz, so realistically the battery announcement will be out before the IPO. Also they’d have to disclose the bottom line details about the K with GM. The liability here is crushing so they’ll be careful.
More likely is that, if they truly don’t know at this point, they’re filing with the idea that if they do get the K they can go forward, and if don’t get the K they can shelve the filing.
August 8th, 2008 at 12:13 pm
#12 Cire
IPO = Initial Public Offering. It’s when you offer stock in your company for sale to the general public. It’s the basic way companies in the western world raise capital for things like …. a production line for batteries for the Volt. In tech it’s the ultimate exit strategy for venture funds and for founders and early investors.
The details of the offering are a little confusing and generally involve one or more lead investment banks buying the stock and then reselling it to other investment banks, which in turn offer it to their customers and ultimately to the public. Pricing is always dicey because the banks want the price low — they don’t want to be stuck with the inventory — and the company wants it high so they get more money.
With an IPO timing is everything — you want to do the IPO when it will get you the most money. Now is not a very auspicious time for an IPO so I’d think A123 thinks it has a compelling story.
August 8th, 2008 at 12:20 pm
Yep! That just about guarantees that they did not get the contract. If they still thought they had a chance they would wait until after the selection. Then their price would shoot through the roof! That’s too bad because I was really hoping they would win it.
August 8th, 2008 at 12:27 pm
What is the ticker sign? I would like to buy some stock. TED
August 8th, 2008 at 12:29 pm
It was reported many months ago that A123 would do an IPO probably around this Sept. Speculation that this timing is directly related to receiving or not receiving a Volt contract is just speculation. They are a valuable company even without a Volt contract.
As for IPOs invariably lagging the market, not true. The average is true, but exceptional companies come out at a high valuation and consistently outperform the market thereafter until industry maturation. Google, Microsoft.
August 8th, 2008 at 12:34 pm
A123 should collect billions. The best battery in the business. GM will be just a small part of their portfolio.
A123 will dominate. You read it hear first. My power tools use A123, the best tools I have ever used. Time to move some of my funds quickly.
August 8th, 2008 at 12:35 pm
I wonder if Jim Cramer will say “buy, buy, buy”.
August 8th, 2008 at 12:35 pm
#8, txkenny, That same thought crossed my mind.
#6, talks, GM is building just 10K Volts for 2011. That’s not so many batteries to crown “Largest Li-Ion Manufacturer in the world.”
Toytoa, Mitsubishi, Nissan, even Honda might order more a greater quantity Li-IONs by 2010. If Ford switches Escape to Li-Ion, Ford will be doing at least 25K batteries.
August 8th, 2008 at 12:36 pm
Ticker sym = AONE
That is what it is reported to be, if/when they go public.
August 8th, 2008 at 12:39 pm
Okay, someone explained IPO. What is meant by “getting the K” ? Strikeout?
This is very good news, there is a huge future for a general, untethered manufacturer of large-scale Lithium Ion batteries. They can still do research without ‘freezing’ a specification for one manufacturer, and it’ll increase the odds that one day you’ll be able to go to a parts supplier and get Li-ion for your custom conversion or whatever like you can get deep-cycle Lead Acid batteries today.
August 8th, 2008 at 12:43 pm
I hope all employees at A123 become instant millionaires, they deserve it.
August 8th, 2008 at 12:45 pm
I don’t have a clue what this means about A123 getting a contract with GM. Powerful arguments can be made on both sides of that speculation. But, I wish them well and hope all their employees and investors become wealthy. It is the capitalist way!
I’m still hoping for a Volt battery pack manufactured in the U.S. and owned by a U.S. company! It ties in with what I’ve previously stated about the need to rebuild the U.S. manufacturing base to create jobs, jobs and more jobs. JMHO
August 8th, 2008 at 12:47 pm
Their revenue is flat, their capital expenditures have more then doubled, their losses have increased, and they haven’t even got the battery contract for the Volt, which will only produce 10,000 units by 2010, which is still two years away. At their current loss rate, assuming it doesn’t increase they are going to burn through $51 million which will leave them a little under $75 million. Not to mention they will still need to finance construction of a new plant which will likely lead them to raise additional capital.
for anyone interested here is an income statement they reported
http://www.techcrunch.com/2008/08/08/is-the-ipo-window-opening-up-again-a123-systems-files/
August 8th, 2008 at 12:49 pm
-
August 8th, 2008 at 12:49 pm
Don’t listen to the naysayers. Buy ALL the A123 stock you can. You will make a fortune within DAYS of IPO. This is how IPOs work. Instant wealth. Boy, I am glad I came to this country, I love America. I’m gonna be rich.
Thanks for the tip, this is indeed very very good news.
August 8th, 2008 at 12:52 pm
If you want to tell your boss what you really think of him, then buy A123 stock now ! This is going to be HUGE.
August 8th, 2008 at 12:54 pm
Thank you, I have been waiting for this announcement for a long time. Finally my ship has arrived.
August 8th, 2008 at 1:09 pm
Still waiting for the overdue announcement of who gets the GM production contract. It was supposed to happen last month. Could they have delayed the announcement to avoiding affecting the IPO? If so, can we expect an announcement in about a month? Nissan is investing millions in battery production facilities, and I expect the same is true over at Toyota. Will the big boys crush A!23 like they are crushing GM, Ford and Chrysler?
August 8th, 2008 at 1:10 pm
#27, #28, #29,
Were you told to say that by A123?
Just kidding.
Or am I?
August 8th, 2008 at 1:17 pm
Win or lose the GM contract, A123system has done a hugh amount of R&D on thier Li-ion battery packs , Seams to me thiers alot more players in elec. car game other then GM.
August 8th, 2008 at 1:22 pm
A 106 MPG car found on cnn.com.
http://www.cnn.com/2008/TECH/08/08/air.car/index.html
August 8th, 2008 at 1:22 pm
You all might want to be careful about this and not buy a lot of their stock.
In my humble opinion an IPO is usually not the best time to invest in a company. Of course this is a general statement and there’s lots of exceptions, but IPO time is risky.
If they IPO, then don’t get the Volt contract, but still appear to have great technology, THAT’s a good time to evaluate buying in.
If they don’t get the Volt contract I’ll be curious what the reason it, and if it’s a failure to integrate great technology into a battery pack, OR if the underlying technology is not ideal for whatever reason.
Another idea might be to buy into both companies at this point, take a loss on one of them, and hope the other will far offset that loss.
Praise Allah, he speaks to me with investment advice.
death to oil http://www.oiljihad.org
August 8th, 2008 at 1:29 pm
True, Google and Microsoft had great returns if you bought on the IPO (I had a friend short google on the IPO, I can’t believe he did that). But the reason he did that was he was blindly betting the odds. DonC is right. Most IPO purchases will lose money after the intial surge. So, watch it carefully if you get in early.
I think (and I have NO data whatsoever to back this up) that the relative FAME of the company will affect how the price goes initially after the IPO. Google and Microsoft were very famous. A123 despite how much WE all know about them around here, are not nearly as famous out in the general public.
A lot will depend on that contract, too. That will have a huge impact on the perception of value, one way or the other. If the contract is announced before the IPO, I think it’ll be factored in and the price probably won’t move much. If the contract is announced after the IPO, then I’d wager the stock is going to move and move big one way or the other. And I mean wager….
August 8th, 2008 at 1:32 pm
A123 IPO will create massive wealth for its investors. Talk to your broker today.
August 8th, 2008 at 1:38 pm
I thought the A123 cells were used in both the Hymotion Prius extender packs and they also have gotten funding from GE in conjunction with another little electric from the netherlands I think. They are used in both the DeWalt power tools and Black and Decker.
I also expect battery technology to evolve rapidly in the next few years.
August 8th, 2008 at 2:32 pm
Q: Why are they called “Brokers?”
A: Truth in Advertising.
~~~~~
“The Relativity Network” takes you now to 2020 AD, for the financial news:
“The newly merged A123-Conti announced layoffs for the third straight week today, in the wake of GEStor’s recently announced ‘Zircon’ model energy storage unit; featuring a five-fold capacity improvement per ounce over their already hugely successful ‘Zeuss’ line …”
No, this isn’t very likely. Just a reminder that the unexpected can happen …
August 8th, 2008 at 3:05 pm
Maybe A123 knows it is not getting the contract and they want the IPO before the announce to get as much cash as they can.
August 8th, 2008 at 3:16 pm
Hey Bob, we gonna be rich. But daddy we already rich.
August 8th, 2008 at 3:36 pm
A123System has manufacturing facilties in many parts of the world. It is a good bet that GM’s contract will be with them. I say “GM” instead of “Volt” because these batteries will be used for many other GM vehicles.
The company, founded in 2001, was spun out of MIT and has grown to more than 850 employees worldwide, with facilities in Michigan, Canada, China and Korea.
August 8th, 2008 at 3:43 pm
I know its not appropriate for this blog, but I couldn’t resist poking some fun at our glorious leaders. (I’m from Illinois and Mr. Obama is my senator although I doubt he has done much to represent the state in the last 2 years). Mr. Obama is packing for vacation with his wife and kids in tow. Notice the picture on the link. That vehicle looks a lot like a black Suburban, (Because it is). Mr. Obama wants me to move to a big city, live in a 300 sq. ft. apartment with illegal alians, ride a bike to work in the winter, and most importantly, vote democratic, all the while he and his type cruise the highway in a 14 mpg SUV burning government gas. Leaders lead by example. The government better hope GM does not go under or they will have to import ZIL limo’s from Russia to drive around in.
Good luck to GM. I’ll buy a Volt but it will be a used one some time in 2014.
http://caffertyfile.blogs.cnn.com/2008/08/08/right-time-for-obama-vacation/
August 8th, 2008 at 3:46 pm
42 Solo:
I think his is a two mode hybrid from GM….so 21-22 MPG.
August 8th, 2008 at 3:53 pm
I wish A123 the best of luck and hope their products make them lots of money.
DonC #10
I’m with you. I will never purchase an IPO because they historically do not perform well. A little more on the story, they typically perform well for a few weeks, when people who read the news run out and buy it. For this reason, if you are hold stock from day 1 (investment banks sell them as favors) you make money by selling to the suckers. This is the reason why investment banks like to keep the price low. They sell them to their best customers who then screw the suckers.
And DonC if you’re reading this, you’re calculation from the other day had several errors in it. You ignored drag from rolling resistance and drivetrain. These change your results because TOTAL drag does not go up that quickly. Your point on range being sensitive to driving habits is still valid but half the reason is because engines are less efficient at higher RPM’s. We’ll see how the electric motors turn out.
August 8th, 2008 at 3:56 pm
If A123 knows that they are not going to get the contract, or the think it is likely that they won’t get the contract, or “should have known” that they wouldn’t get the contract, they will be open to massive share holder lawsuits. There’s a whole branch of law that does on this type of lawsuit. If the actual IPO happens after the contract announcement, however, they won’t be at nearly as much risk from litigation. That’s regardless of how the GM deal goes.
I was under the impression that they had a large part of the laptop market. In that case the GM deal isn’t really necessary for their long term health.
August 8th, 2008 at 4:10 pm
43 Morgan
I took a look, It’s a Suburban, not a Tahoe, The Suburban is not available as a Hybrid yet.
Does anybody know if you can get Tahoe Hybrid’s yet? From what I read, production is very slow. I have not seen one on the highway yet. How long do you have to wait if you place an order? Just curious if anybody knows if they are backed up on orders like the Civic, Prius.
August 8th, 2008 at 4:39 pm
#43:
When I was at the Chevy dealership a few months ago buying my Cobalt, there were several hybrid Tahoes on the lot, at about $50,000. No one was buying.
August 8th, 2008 at 4:43 pm
#46 solo:
Well they must be available in the LA area. I am seeing dealers’ ads in the local paper offering a $6000 rebate. The Chevrolet website is actually very good at searching dealer inventories in your local area, based on the Zip code.
August 8th, 2008 at 4:53 pm
#46 solo:
I just checked the Chevrolet website. I found over 30 on dealer lots in SoCal, all with $6000 in factory incentives. Of course the MSRP is over $52K.
August 8th, 2008 at 4:57 pm
A123 might get rich, but eestore, and ultracap companies have just as much of a chance.
One, two, three, here chickens.
August 8th, 2008 at 5:04 pm
#42 solo
The vehicle is probably for security reasons. The Secret Service who protect him have special vehicles (black Suburbans are a vehicle of choice) that have a variety of countermeasures on them that would not be appropropriate for a smaller, more effecient vehicle. Senator Obama has to naturally ride in one too so that the people out to kill him don’t know which vehicle for sure that he is in.
History has shown that politicians who shake the boat (i.e. Like President Kennedy) tend to be targets for assasination. Riding in a small or open vehicle is just inviting someone to take a shot.
FYI: A would be Obama assasin was arrested recently in Florida so I don’t believe that this is just an idle precaution. Leaders DO lead by example, but only if they are still alive. I am sure that the Secret Service will use electric Suburbans when they are eventually made.
August 8th, 2008 at 5:19 pm
#44 Cautious Fan - “And DonC if you’re reading this, you’re calculation from the other day had several errors in it. You ignored drag from rolling resistance and drive train. These change your results because TOTAL drag does not go up that quickly.”
Man, you are not letting me off on this, are you?
You are right about my not including the drag from tire resistance. (I’m not sure about drive train drag since we’re talking about a car sans transmission). That doesn’t make the calculation wrong. I think what I did was correct as far as it went.
The reason I didn’t mention tire resistance, and the reason I don’t think the omission was material, is that we were talking about high speed driving, and, as speed increases, air drag dominates. For example, let’s assume a car (the Volt) is 1500Kg with a front area of 2.5 square meters, a Cd of .25, a tire resistance of 1.2% at 50Km/h, and a tire resistance of 1.6% at 120Km/h. (These seem reasonable). In this case, at 50Km/h you have 176N attributable to the tires and 232N to wind drag. At 120Km/h you have 235N attributable the tires and 694N to wind. It just keeps going like that, with air resistance increasing with the square of the velocity and tire resistance staying flat and linear. When you get to 100 mph tire resistance might be only 10% of total drag. (Even less with smaller or low RR tires).
You can see this just from the equations. Tire drag is just the Kg * 9.8 (gravity) * coefficient. Aerodynamic drag is A (area) * Cd (coefficient) * V^2, where V is speed in Km/h * 1000 meters / 3600 seconds (conversion constant).
[Hopefully these numbers are right. Sometimes I press the wrong button. :-(]
August 8th, 2008 at 5:46 pm
IPO. Well it was only a matter of time.
I was them lots of luck.
August 8th, 2008 at 5:50 pm
Let’s remember that A123 does not make the battery pack per se, they make the cells. Continental AG makes the pack which essentially is the battery.
However, in light of the fact that GM is going to warrant the battery for 10/150,000 it would sure seem that chemistry of the cells will be of utmost importance. In that regard A123 is superior to LG chem, and this is important when no one has any empirical evidence as to how long these packs will actually last.
August 8th, 2008 at 5:55 pm
#42 Solo
Doubtless a far better example of horrible leadership on the energy front would be John McCain’s offering his wife up for a sleazy bikini contest at Sturgis while encouraging a bunch of drunks to support a drive to end our addiction to oil by wasting gasoline by revving their stationary Harley’s. Topped off by a stream of complete misinformation and non-sequiturs about drilling and nuclear power which probably make perfect sense when you’re drunk but not much when you’re sober.
You can see his performance on a matter of the utmost importance to our economy and national security by looking at the tape below.
http://www.youtube.com/watch?v=n8v7vz9KzQw
August 8th, 2008 at 6:21 pm
Kent #47
“When I was at the Chevy dealership a few months ago buying my Cobalt, there were several hybrid Tahoes on the lot, at about $50,000. No one was buying.”
*** *** ***
I know for a fact that Sean Hannity has one, he mentions it just about every episode. Fifty grand is pretty steep though!
How do you like the Cobalt? I’ve heard mixed things about it, but I know for certain that the SS has quite a loyal following.
August 8th, 2008 at 7:26 pm
#56:
The 2008 Cobalt is OK, nothing great but definitely nothing bad. I bought it to save gas, but I mainly got a great deal…$9,400 out the door…and this was with an automatic transmission and A/C. I definitely got more than what I paid for. I’m averaging 32 MPG combined driving, which is more than double my SUV.
August 8th, 2008 at 8:12 pm
So it’s not official
August 8th, 2008 at 9:04 pm
A123 stated at the beginning of the year, IIRC, that they would go for an IPO in September, so I doubt it has anything to do with GM announcing the battery contract.
August 8th, 2008 at 9:04 pm
Since ThombDbhomb doesn’t seem to be online tonight, I’ll be the one to say “are you sure you want to go there,” DonC (#55)?
August 8th, 2008 at 10:38 pm
OT: Suggestion
I think this wonderful board needs a rating system for posts. As the popularity of this board increases finding the quality posts will be an issue. Here’s an example of what I mean:
http://www.investorvillage.com/smbd.asp?mb=476&clear=1&pt=m
August 8th, 2008 at 10:59 pm
#60 Jackson
Good call, except solo started it with #42. Blame solo for going so low.
August 8th, 2008 at 11:32 pm
#60 Jackson
As noted, my post was a response. But I don’t think that matters. What exactly do you think was wrong with it? I’m more than willing to entertain objections if you’d care to be more specific.
From my perspective you seem to think it’s OK to repeat fanciful musing uttered by some clown at Fox News but not OK to post a link to unedited footage of a John McCain rally. I didn’t edit anything. McCain may look like a jack@ss on energy but that’s not exactly my fault. Hey, if you’re drunk and clueless you may think he’s making a compelling case. Vroom Vroom
The link is also quite relevant to this board. While this is a Volt fan site, energy policy is an important part of the Volt story. My link was to a speech on energy by a presidential candidate. As such, it was and is as deserving of coverage as McCain’s or Obama’s trip to GM.
August 9th, 2008 at 6:12 am
#18. A123 Says:
“August 8th, 2008 at 12:34 pm
A123 should collect billions. The best battery in the business. GM will be just a small part of their portfolio.
A123 will dominate. You read it hear first. My power tools use A123, the best tools I have ever used. Time to move some of my funds quickly.”
I thought Valence Technologies had the best Li-Ion battery in the world. Oh well, competition is good.
August 15th, 2008 at 11:33 pm
Now for a little rain on the Parade.
Bob Lutz said that there was only one brand of batteries being used in the mules. And he hinted it was NOT A123.
Plus LG has been ballyhooing the fact that its batteries were being tested on vehicles in the Volt development program.