I admit it’s not immediately obvious why a stock that’s fallen 95% in five years would be one to consider buying. However, some people still are. Indeed, last Wednesday (3 June), 5.9m Aston Martin Lagonda (LSE:AML) shares changed hands for between 41.2p and 43.1p.
Admittedly, this is a long way short of the group’s IPO price of £19. However, it does show that some people believe there’s value in the British icon. Are they right? Let’s take a closer look.
Hitting the headlines
Sports cars have been in the news recently (26 May), with Ferrari launching Luce, its first all-electric model. And it didn’t go down too well. The company’s former chairman, Luca di Montezemolo, commented: “We’re risking the destruction of a legend, and I’m truly sorry about that. I hope they at least remove the prancing horse.”
Personally, I think it looks a bit like something Noddy would drive. It’s too tall for a sports car but, then again, the batteries have to go somewhere.
Even so, I have no doubts it will sell. I reckon anything with a Ferrari badge will prove popular with enthusiasts who have a few hundred thousand to spare. That’s why, despite billions being wiped off the company’s value in recent days, the Italian legend’s stock still trades on 33 times historic earnings.
Are things about to improve?
Fortunately, Aston Martin doesn’t have to worry about the aesthetics of its cars. They’ve often been likened to works of art. But as the table below shows, the company doesn’t sell enough of them to be profitable.
| Period | Cars sold | Revenue (£m) | Net profit/(loss) (£m) |
|---|---|---|---|
| 2015 | 3,615 | 510 | (107) |
| 2016 | 3,687 | 594 | (148) |
| 2017 | 5,098 | 876 | 77 |
| 2018 | 6,441 | 1,097 | (57) |
| 2019 | 5,862 | 981 | (118) |
| 2020 | 3,394 | 612 | (411) |
| 2021 | 6,178 | 1,095 | (189) |
| 2022 | 6,412 | 1,382 | (528) |
| 2023 | 6,620 | 1,633 | (227) |
| 2024 | 6,030 | 1,584 | (324) |
| 2025 | 5,448 | 1,258 | (493) |
| 2026 (Q1) | 939 | 270 | (63) |
And recently, all sorts of things have conspired against the British company. US tariffs and quotas, supply chain inflation, changes to luxury car tax in China, the phasing out of the combustion engine, and falling demand, have all hit Aston Martin hard.
The group’s share price has fallen so much that the company’s market-cap is now only 30% (£97m) more than its 31 December 2025 book value. By comparison, Ferrari’s is 13 times higher.
It’s also concerning that Aston Martin’s net debt at 31 March was £1.46bn.
But the group’s directors are expecting better things in 2026, thanks to “an enhanced product mix and benefits from the ongoing transformation programme and disciplined approach to operations”.
This should lead to a significantly higher gross profit margin – possibly up to 10 percentage points – and lower overheads.
Q1 2026 confirms that we are on track to deliver [a] material financial improvement this year
Chief Executive Adrian Hallmark
My view
Unfortunately, Aston Martin’s not for me. Even at around 43p. Indeed, it’s hard to know what is a fair price for a loss-making company.
And it’s so far away from being profitable that it’s going to take a large number of things to go right for the company — some of which are outside its control — for it to move into the black. It’s just too risky for me.
But should there be signs that things are starting to improve, I’ll be back again to take another look.
Should you invest £5,000 in Aston Martin Lagonda Global Plc right now?
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James Beard does not hold any positions in the companies mentioned.
