17 December 2024
Market Round-Up
Ashtead Group, which specialises in providing rental equipment services, including construction and industrial equipment, in the US, UK, and Canada, has recently lost nearly 17% of its market value. This sharp decline followed the company’s profit warning and announcement of plans to delist from the London Stock Exchange and transition to an American stock exchange, pending official shareholder approval within the next 18 months.
The US accounts for approximately 85% of Ashtead’s revenue, which has been steadily increasing over the past three years. In contrast, the UK, its second-largest revenue region, has experienced a decline during the same period. The company stated that moving to an American exchange would provide a more favourable business environment, particularly given its significant revenue exposure in the US and potential opportunities arising from President-elect Donald Trump’s economic growth plans for his upcoming term.
Analysts were unsurprised by Ashtead’s decision to delist, given the substantial difference in revenue exposure between the US and UK and the ongoing trend of UK companies abandoning London listings. Companies like Endava, Arm, and Flutter Entertainment have similarly opted for listings in other markets.
In its latest update, Ashtead reported results that missed analysts’ expectations, with sales revenue falling short by 1.7% and earnings per share (EPS) declining by 4.9%. Additionally, the company warned of lower profit expectations for the coming year (April 2025), though it did not provide specifics. Key challenges include a high interest rate environment, a slow recovery in the US construction industry, and current supply chain issues.
Elon Musk’s rocket and space technology company, SpaceX, has become the most valuable private startup in the world. Recent transactions saw investors purchasing SpaceX shares from employees at US$185 per share, a nearly 65% increase from the US$112/share price traded a few months ago and almost double the price from a year ago. With this jump, SpaceX has reached a valuation of US$350bn.
Despite this milestone, Musk revealed that some investors refused to sell their shares even at this historic valuation, reflecting their confidence in the company’s potential for further growth. Musk’s vision of colonising Mars and expanding access to space travel continues to attract believers, driving SpaceX’s rise in valuation.
Musk has also benefited from the recent US elections, with Tesla shares increasing by nearly 60% since President-elect Donald Trump’s victory. Additionally, Musk’s artificial intelligence venture, xAI, recently secured US$6bn in investments.
However, not all of Musk’s companies have thrived. X, formerly known as Twitter, has suffered a decline in valuation after advertisers withdrew from the platform. This setback challenges the US$44bn valuation that Musk paid.
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. The information and views were correct at time of publication but may have changed at point of reading.