TomTom shares: Price analysis before buying or selling

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No

ISIN code: NL0013332471

Ticker: AMS: TOM2

Index or market: Euronext Amsterdam

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Elements to consider before selling or buying TomTom shares

Analysis N°1

First of all, we will be closely following Tomtom's investments in research and development as well as its main innovations.

Analysis N°2

The regulations regarding geolocation and therefore GPS guidance can be more or less strict depending on the country and you should follow with interest any major changes in this direction.

Analysis N°3

Competition is of course an important element in this fundamental analysis. In particular, we will take into account the group's indirect competitors, including mobile phone manufacturers that include GPS or developers of mobile route guidance applications, which are usually free.

Analysis N°4

Finally, we will be closely monitoring the possible diversification of the group's activities through acquisitions or the establishment of partnerships with car manufacturers in particular, which would help boost the company's sales and profitability.

Analysis before buying or selling TomTom shares

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General presentation of TomTom

You probably already know the TomTom brand for having used one of its GPS. Indeed, this Dutch group is specialized in the design and development of innovative navigation systems and related products. It is the international leader in this sector.

The group divides its business into four divisions: Consumer, Automotive, Licensing and Telematics.

TomTom's share price is currently listed on compartment A of the Euronext Amsterdam market and is included in the calculation of the AMX stock index.

Over the past ten years, TomTom's share price has risen sharply, reaching a high of €64.90 in November 2007, before falling back to €2.84 in February 2009. Since then, it has been trying to stabilize near €7 with a slight upward trend.

Photo credits: ©photopackpl/123RF.COM

The major competitors of TomTom

The TomTom group is a software publisher specialising in the design, development and marketing of navigation systems. In this respect, it faces competition from other companies operating in the same field of activity, the main ones being

Garmin & Navman

TomTom is also the third largest VPN provider in the world right after its competitors Garmin and Navman.

Other competitors

Baidu Map, Bing Map, Bhuvan, Google Maps, Here WeGo, Map World, Mappy, MapQuest, ViaMichelin and Wikimapia.

The major partners of TomTom

Finally, here are the latest partnerships set up by TomTom in recent years.

AutoNavi Holdings Ltd

In 2010, TomTom formed a joint venture with the Chinese company AutoNavi Holdings Ltd to develop map data in China.

Microsoft

In 2016, TomTom Group announced a partnership with Microsoft with the goal of integrating location-based services into Microsoft Azure. This innovation will enable greater flexibility in how developers build and manage enterprise, mobile, web and Internet of Things applications.

PSA

TomTom also partnered with the PSA Group in the same year to implement TomTom Telematics' award-winning Webfleet solution for Peugeot, Citroën and DS connected vehicles in France, Spain, Belgium and the Netherlands.

Fiat

Also in 2016, TomTom partnered with the Fiat Group to provide a new navigation solution.

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The factors in favour of a rise in the TomTom share price:

Firstly, the Tomtom group benefits from a strong brand image thanks to the high quality of its products and its constant technological innovations. The products offering Live services in particular are known as the most qualitative on the market with very recent real-time services such as HD traffic, information on the presence of speed cameras or localized search.

Tomtom is a company that can also reassure its customers thanks to its large customer base. The group has no less than 50 million users worldwide, which guarantees a certain stable income, especially as the company is able to retain its existing customers.

Tomtom's strong international presence is another undeniable asset of the group. The company currently markets its products in 37 different countries. This allows it to effectively limit the risks associated with a single market. Tomtom is particularly well represented in Europe, where it has a 48% market share, and in North America, with a 27% market share.

The launch a few years ago of a very successful mobile navigation application is also good news in the eyes of shareholders and analysts. Indeed, this application is now one of the best-selling products on the Apple App Store, with no less than 500,000 downloads.

Still on the subject of Tomtom's strong points, we can of course talk about its judicious partnerships with Nike in particular, but also with certain car manufacturers such as Toyota, BMW, General Motors or Ford.

To face the very strong competition in this sector, Tomtom can also count on its database which is the most complete at present with more than 12 countries and 5 million kilometres of roads more than its main competitor.

Finally, Tomtom's last asset is the quality of its supply chain and distribution model, which is completely outsourced. This allows Tomtom to benefit from a greater capacity for expansion or, on the contrary, to rapidly reduce its supply chain or to develop new products more easily.

The factors in favour of a drop in the TomTom share price:

The first major weakness of the group concerns the very high operating costs, which have risen sharply in recent years and since 2010. This increase in expenses is not due to chance. Indeed, we know that the Tomtom group has invested heavily in research and development in recent years and has also put a lot of money in the field of marketing, which is just beginning to bear fruit.

Another undeniable weakness of the Tomtom group concerns its financial resources. Indeed, the group has far fewer resources than its competitors, which severely limits its ability to gain market share due to its low investment capacity, particularly in the context of acquisitions. Tomtom also has fewer human resources than its main rivals.

Finally, the last current weak point of Tomtom concerns its suppliers. The latter are indeed few in number. This can be explained by the technological specificity of certain products required for Tomtom devices, which are produced by only a few companies. Of course, this clearly weakens the negotiating power of the company, which does not always have full control over the cost of its production and exposes itself to a significant risk in the event of a dispute or a stoppage in supply.

As you can see, these few flaws can have a significant influence on Tomtom's share price and you should therefore consider them carefully.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

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Analysis before buying or selling TomTom shares