Aston Martin share price: Could AML rev-up your trading strategy – or vanquish it?

 Adrian Holliday 11:57, 17 June 2022 UTC • Updated

The Aston Martin (AML) share price has cratered more than 73% in the last year though a pop-up spoiler lifted this morning: AML shares surged 11% to 520.8p with little in the way of news apparent to explain the move.

Aston Martin (AML) share price chart

AML share price: short ride in a fast machine?

That’s still not much change from £14.26 a year ago, however, well before markets turned south.

Though Aston Martin’s 2018 IPO was a disaster it has a new management structure and chief executive, the third in as many years. Amedeo Felisa, 76, is a former Ferrari boss.

Some of its models are sold out too – its Vantage V12 sold out with a basic sticker price of £265,000.

But Aston Martin faces supply chain strikes, it has been bankrupted multiple times and profits are rare. Even its engineering heritage is patchy.

Sales grid issues

China is a major market and Covid restrictions remain a sales and revenue barrier. JP Morgan analyst Jose Asumendi says AML is still a few years from generating cash and real value. 

“The equity story is still risky,” Asumendi said last month, “and the business model hinges on two very different stages of execution and growth. 

“In the first phase (2021/22), AML still has to focus on rebuilding the GT/Sports car brand and profitably selling the [new SUV model] DBX, limiting cash burn and avoiding another equity raise.”

Burning rubber and cash

Aston Martin’s net debt levels were more than £950m in the first quarter and much of this debt is dollar denominated – the more the pound falls, the higher the payments are.

AML revenues are around £1bn a year and grew 4% in the first quarter. Pre-tax losses were £111m. Executive chairman and billionaire Lawrence Stroll wants to see sales more than double to 10,000 units a year by 2024, which is not far off Ferrari’s total sales output.

That’s a tough goal in the current rough environment with soaring inflation and interest rates. There’s also the risk of share dilution – Mercedes owns around 12% of AML which climbs to 20% by 2023 – if more equity is needed. 

A growing green agenda is also present – Aston Martins are highly polluting and the path to electrification is complicated and expensive. 

£200k-plus cars, £10 hour wages, battery future

Although new boss Felisa is now at the wheel, the departure of former CEO Tobias Moers in May was a shock. Moers, ex Mercedes-AMG, had striven to move AML upmarket. 

Before his appointment Felisa was on AML’s board of directors but, still, the HR volatility at AML is unsettling.  

Strike action also looms. 

Aston Martins are made in the Warwickshire village of Gaydon but the Unite union claims some supply chain workers who make the fancy seats and trim earn less than £10 an hour. 

Stroll meanwhile has promised a programme of model specials which will demand premium prices, and gross margins across AML's model range are up – substantially in some cases. But a pure all-electric AML model won't arrive till 2025.

Further reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.

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