City left stunned as AO.com soars on stock market debut

Shares  in online white goods business initially soared above 410p before easing back to 399p

The City was left stunned today as shares in online white goods business AO.com soared over 40 per cent on its market debut, valuing the company as bigger than Argos-owner Home Retail and the same size as Dixons.

One analyst suggested the £1.2 billion valuation echoed the dot-com bubble, which saw overvalued technology companies spectacularly collapse after rapid rises in the early 2000s, while others questioned the company’s business model.

With the offer price of 285p already towards the top-end of expectations, shares initially soared above 410p, before easing back to 399p.

AO.com founder John Roberts took home £86 million pounds today from selling part of his stake in the business he started 14 years from a pub in Bolton, and the soaring share price leaves him with a paper fortune of £480 million from his remaining 28.6 per cent stake.

Finance director Steve Caunce holds a 13.6 per cent stake worth around £240 million.

“I don’t get it,” Freddie George, retail analyst at Cantor Fitzgerald, told the London Evening Standard. “The last time I saw something like this was in the internet boom in the 2000s. This is very much like that.”

“The stock market does have these sort of phases, with the technology companies going to unbelievable highs. I image US institutions are into this in a big way but with £370 million of [full-year] sales forecast... a £1.2 billion valuation doesn’t make sense.”

Kate Calvert, retail analyst at Investec, was also unconvinced by the valuation. “To me it is difficult to understand the valuation,” she said, adding: “By most conventional measures it is a very full valuation.”

Roberts (pictured) said he was “delighted that our initial public offering has been so well received by investors. They have understood our business model and our potential.”

AO.com has ambitions to grow overseas and wants to be the biggest online electricals goods retailer in Europe.

Dixons has already attempted to hit back against suggestions it is losing out to AO.com, telling analysts and investors last week that it is 3 per cent cheaper than online competitors, has a cheaper supply cost on deliveries, and pointed out that it does not reward customers who leave favourable reviews with vouchers, unlike AO.com.

AO.com is one of the first of a rush of retailers to join the stock market, with Poundland, Pets at Home, DFS, House of Fraser and boohoo.com all set to follow.

Start your day with The Independent, sign up for daily news emails
Property
pets
Arts and Entertainment
tvGame of Thrones season 5 ep 4, review - WARNING: contains major spoiliers!
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
News
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Sport
football
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
News
news
News
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living