The rise and fall of Valuations: inside the real-life stories that made headlinesWhat are well-known brands worth? And what makes them experience a sudden rise or fall in value?
Whether you’re in the valuations world or not, people are always interested in what well-known brands are worth. And the most newsworthy stories are those of companies that experience sudden success, or on the other hand, a sudden dive.
Here are some examples of businesses that have had famously significant changes in their valuations.
One of the most prominent examples of a company that’s experienced a huge increase in its valuation is the British online fashion retailer ASOS. In the early 2000s, the company was struggling to stay afloat, with annual losses of nearly £30 million. However, over the next decade, ASOS was able to turn things around, and by 2017 it had become one of the fastest growing companies in Europe with a market capitalisation of more than £4 billion, making it Britain's biggest online-only fashion retailers.
Another British brand that experienced a dramatic rise in their valuations is passenger airline, EasyJet. EasyJet originally started as a small budget airline in 1995 and since then has grown into one of Europe's largest passenger carriers, with an estimated market value of £5.2 billion in 2020. The major drivers behind this rise are the expansion into new markets such as Spain and Eastern Europe, as well as establishing itself as one of the first low-cost carriers to offer transatlantic flights from London to New York City and other US destinations.
(3) American International Group (AIG)
American International Group, more commonly known as AIG, is an international insurer with some interesting valuation experiences since it was founded in 1919 as a Marine Insurance business. In 2008, the company experienced a dramatic drop in stock value - from a high of $70 to an all-time low of 39 cents - after the global financial crisis.
As the United States federal government was concerned over AIG's stability in the markets, they injected $182 billion into the company to prevent its collapse and assure investors of their stability. Much to many people's surprise, despite this huge drop in value and substantial bailout effort, shares of AIG eventually went back up and saw peak levels not seen before the crisis!
In contrast to these companies whose valuations have increased dramatically over time, there are also those who have seen their valuations fall drastically over time. One example is Carillion PLC, one of Britain’s largest construction firms, which went into liquidation in 2018 after suffering from financial difficulties due to costly contracts and large debts amounting to nearly £7 billion. The company’s share price dropped significantly prior to its liquidation, resulting in investors losing up to 75% of their investments.
(5) Lehman Brothers
Valuations specialists will no doubt be familiar with the cautionary tale of Lehman Brothers, one of the iconic companies on the list of well-known businesses who've seen its value soar and crash overnight. The fourth-largest bank in the US at the time declared bankruptcy in 2008, making it the largest failure since the Great Depression. The takeover by Barclays was too little too late to save Lehman Bros., but certainly raises an important red flag for valuations specialists when considering investments.
(6) Barclay’s Bank
Following on from the last example, is Barclays Bank PLC which also experienced a huge decrease in its valuation. In 2009, and after the collapse of Lehman Brothers during the global financial crisis, Barclays acquired much of Lehman’s North American operations at what would later be revealed as an inflated price tag. This led to significant losses for Barclay’s shareholders and caused their market capitalisation to plummet from £32 billion before Lehman’s bankruptcy filing down to just under £20 billion by 2011 when it posted its first annual loss since 1994.
Valuations specialists and professionals in the valuations sector all know the name Enron. Once a massively successful energy corporation and a true pioneer in its field, it spectacularly crashed, and its stock value plummeted at an unprecedented rate. The effect of this was devastating to the entire industry - it became a symbol of corporate mismanagement and was studied widely by those looking to ensure their valuations didn’t suffer similar fates. Valuations experts can look back on Enron as an important lesson and reminder that unpredictability is always lurking around the corner.
(8) Bear Stearns
Bear Stearns is a quintessential example of the extreme market volatility so often seen in the financial world. The firm suffered a dramatic fall from grace, with its valuation plummeting a staggering 85% in less than two weeks as the 2008 Great Recession unfolded. Starting out as one of Wall Street’s most respected investment banks, Bear’s stock price saw its peak in 2007 before spiralling downwards and leading to shareholder lawsuits and the eventual sale of the critical parts of the bank to JP Morgan despite government rescue attempts. It ultimately serves as a warning, underscoring the fragile nature of public markets.
As an American powerhouse, Ford has become one of the most iconic automakers in the world and their reputation for reliability, value, and performance is well established. Early in 2020, Ford shocked the markets when their stock price suffered a massive drop and shareholders were left to re-evaluate the company's value. Despite this sudden decrease in valuation, Ford continues to be an important part of business culture, with production lines around the world. After some challenging times early in 2020, Ford continues to show innovation as they look towards a better future for both shareholders and employees.
(10) General Motors (GM)
Ford isn’t the only car manufacturer to make our list. GM, or General Motors, is one of the oldest and most famous automobile companies in the world, having been established in 1908. GM has been a leader in car production and design for well over a century, but its status as an icon amongst automotive companies has come with rather volatile stock valuations. In March 2019, the company’s share prices skyrocketed to a high of $45.12 after announcing their joint-venture partnership between GM Cruise and SoftBank Vision Fund.
Unsurprisingly, this significant increase in worth was met by a sharp decline to $27.50 by May of that same year - proving that while risk-taking can be successful (at least temporarily), it also carries with it much uncertainty. Despite these extreme highs and lows, GM continues to remain as a powerhouse name in the auto industry known for reliability, safety, efficiency, and innovation.
Valuations professionals are vital to ensuring the stability and growth of any company. The market’s continuous ups and downs mean long-term job stability for valuations specialists in Accounting & Consulting firms. There’s always work to do! The opportunities are endless and can often be tailored to what you’re looking for.
If you're looking for a career in valuations, or to strengthen your valuations team, Apollo Solutions has a range of opportunities and talent available. Why not get in touch today and start your journey with us?