The first thing to say is that investors should tread very carefully around Aston Martin (LSE: AML) shares. They’re liable to implode at any moment. They’ve done so repeatedly, and not just lately.
Since it hit the road in 1913, the iconic James Bond luxury car maker has gone bankrupt in 1924, 1925, 1932, 1947, 1974, 1981, and most recently in 2007. That’s a habit it can’t seem to break.
Can this FTSE 250 stock win in the end?
There was a huge fanfare surrounding its IPO on the London Stock Exchange in October 2018. It floated at £19 a share, with a £4.33bn valuation. Today, it trades at under 50p, and the market cap is below £500m. That’s a loss of 97.4%.
Some investors still can’t resist it, many no doubt suspecting that after such a disastrous run, Aston Martin must be due a comeback. Isn’t that what James Bond movies do? Keep on raising the stakes until all seems hopeless, then with one heroic leap…
Aston Martin is having a moment right now. In the last month, its shares are up 19.98%. If someone was holding £9,007 on 29 April they’d have £10,806 today. Sadly, if they’re a long-term shareholder, they’ll still be deep in the red. Over 12 months, the Aston Martin share price is down 43%. But why is the stock suddenly firing on all cylinders?
Q1 results on 29 April showed a promising 16% year-on-year rise in revenues to £270m. This followed a surge in special model deliveries, which carry a high price tag. Aston Martin Vantage prices start at around $195,000, while the Vanquish model starts from around $430,000. If that’s not expensive enough for you, try the Valhalla at $800,000.
So how brave do you have to be?
The group still posted a loss, but that narrowed 12% to £57m. And with 2026 car deliveries expected to hold steady at 5,448, the company might accelerate towards break even over the next year. We’ll see.
There are plenty of risks. Selling a small amount of expensive product leaves it at the mercy of even a small dip in orders. Net debt is $1.5bn. That will get harder to service if interest rates climb due to the oil spike. US tariffs are another threat. This is the group’s single biggest market, worth roughly a third of sales. China makes up just 5%.
Aston Martin has been given a further push by hopes that Donald Trump will find a way out of Iran, which has helped lift a stream of consumer stocks latelly. But I think there’s a way to go on that front.
I’d love to see Aston Martin come out on top but that remains a long shot. Investors have to be up for the challenge to consider buying it today. Most should watch from a safe distance. I have a tiny stake and I’ll keep it. But I can see far more promising recovery stocks out there today, and will focus on those instead.
Should you invest £5,000 in Aston Martin Lagonda Global Plc right now?
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Harvey Jones owns shares in Aston Martin.
