It has been a disastrous start for the share of VA Automotive, to say the least. Since its first day of trading on Nasdaq OMX’s First North list on Monday December 1st, the share has declined every single day of trading and is down almost 30% compared to its IPO price of SEK 6,50.
The decline is all the more mysterious as the company has not issued any press release whatsoever since its listing. Neither has there been any negative statistic out that would justify the negative sentiment towards the share. On the contrary, on December 2nd, US November auto sales topped estimated with an annualized sales rate of about 17.2 million vehicles, according to industry consultant Autodata Corp. That was the best pace for that month since 2003 and well ahead of the estimated 16.7 million in a Thomson Reuters survey of 41 industry economists and analysts. Obviously that is great news for a supplier to the automotive industry, such as VA Automotive.
That means that fundamentally, nothing has changed and we still believe that the share should trade around SEK 10, as indicated in our article from December 1st. By trying to investigate what has caused the oversupply on the sell-side and therefore the subsequent share price decline, it has come to our attention that Mr Rolf Gustafsson is unwinding his shareholding in the company. As of September 30th, Mr Gustafsson owned 325 440 shares in VA Automotive, according to the company website.
Mr Gustafsson used to be the CEO of Moderna Verktyg, a company that was acquired by VA Automotive. To our knowledge, Mr Gustafsson is not involved in the operations of VA Automotive and the company does not list him as an insider anymore. It is our best guess that Mr Gustafsson wanted to get rid of his holding for a while and is now using the opportunity given by the public floating.
Looking at statistics provided by Nasdaq OMX First North, a total of 516 649 shares have been traded between December 1st and December 8th. This compares to Mr Gustafsson’s pre-IPO holding of 325 440, as stated above. We have no insight as to how many shares Mr Gustafsson has left. Mr Gustafsson’s holding represents 63% of the number of shares traded in VA Automotive so far. Such a significant amount of supply naturally uneases other investors.
It will be interesting to the see an updated shareholder list for VA Automotive and we hope to see it soon. Not only will it become obvious, whether Mr Gustafsson did flood the market with his shares but also we are hoping that further insiders have participated in the IPO or utilized the share price slaughter (e.g. the CEO who did not own any shares prior to the IPO).