Is the Aston Martin Share Price Too Cheap or a Value Trap?

aston martin

Aston Martin share price has pulled back in the past few days as investors react to the recent fundraising by the iconic company. The AML shares are trading at 483p, which is about 22% below the highest level this month. Its market cap has retreated to about 583 million pounds. 

The fall of an icon

Aston Martin has made headlines in the past few months. For one, its Formula 1 team is languishing at position 9 in constructors championship. There are even rumours that Sebastian Vettel, its legendary driver will jump ship to McClaren soon. 

The company also made headlines when it raised millions of dollars from Saudi Arabia and the consortium led by Lawrence Stroll. In total, the company raised £650 million, which will be used to reduce its large debt and fund operations.

According to the statement, Public Investment Corporation (PIC) bought shares worth about £78 million. It also took part in a £575 million rights issue and become the second-biggest investor in the company. Stroll’s consortium’s shareholding then dropped to about 18%. 

The Aston Martin share price has dropped by more than 60% this year, becoming one of the worst-performing firms in the FTSE 250 index. In addition to Saudi Arabia, the company said that it rejected a large equity funding by Geely Automobile, the Chinese company, and by another private equity company. 

Is Aston Martin Lagonda a good investment?

Aston Martin Lagonda has been one of the worst-performing auto stocks this year. It has underperformed other large companies like Ferrari, General Motors, and Tesla. This performance is mostly because of the company’s large debt, high Chief Executive turnover, and delays in manufacturing. The dwindling share price and significant losses have also pushed many respected engineers.

Now, with the company’s financials relatively in order and with its stock substantially cheap, is it a buy? A case can be made that Aston Martin is a good investment since there is still strong demand for its products. In its most recent results, the firm said that it hopes to have an 8% volume growth, helped by its DBX brand. The firm said:

“Our most recently announced limited-edition, the V12 Vantage, was fully sold out prior to its official launch in March; and DBX707 is making headlines as the premier ultra-luxury performance SUV on the market, generating strong customer interest.”

Aston Martin is also a good acquisition target because of its strong brand in key markets like China and in Europe. It is still unclear whether the team led by Stroll and Mercedes will be open to selling the company. 

Aston Martin share price forecast

aston martin share price

The daily chart shows that the AML share price has been in a strong bearish trend in the past few months. It has moved slightly below the 25-day and 50-day moving averages. Also, bulls have struggled to push it below the important resistance level at 566p. 

Therefore, the outlook for the stock is still bearish, with the next target being at 380p. In the long-term, however, we can’t rule out a situation where the stock bounces back as investors buy the dip.

Leave a Reply

Your email address will not be published.