Picture supply: Aston Martin
Aston Martin Lagonda (LSE:AML) shares have remained caught in reverse over the past 12 months. The FTSE 250 carmaker now offers at 70.2p per share, a whopping 59.5% decrease than it was 12 months in the past.
Somebody who purchased £10,000 price of shares would have seen the worth of their funding tumble to £4,046. They wouldn’t even have acquired any dividends to assist soften the blow, both.
Aston Martin’s share value sits considerably under the 661.9p it was at 5 years in the past. However previous efficiency isn’t at all times a dependable information to the longer term, and investing within the luxurious carmaker immediately may yield sterling returns if it recovers.
So ought to buyers contemplate shopping for Aston Martin shares immediately?
Robust occasions
It’s straightforward on one hand to see the corporate’s unbelievable attraction. Its merchandise are the epitome of favor, pace. sophistication, and let’s face it, intercourse attraction.
Aston Martin’s affiliation with James Bond for the reason that mid-Sixties — and the model’s involvement within the dynamic world of Method One — haven’t achieved it any hurt, both.
However whereas its label and merchandise are extremely fascinating, the identical definitely can’t be stated for the corporate itself, no less than for my part. So what’s the issue?
The difficulty is that Aston Martin is preventing fires on quite a lot of fronts. Final 12 months, pre-tax losses rose by 21% to £289.1m, partly as a result of a 9% drop in wholesale volumes. Gross sales declined on the again of provide chain disruptions and difficult situations in China, troubles that also persist.
Consequently, web debt — which was already fairly regarding at 007’s favorite carmaker — shot up sharply. On the finish of 2024, Aston had web debt of £1.2bn, up 43% 12 months on 12 months. The spectre of recent rights points and debt issuances nonetheless looms giant.
Tariff discuss
As if Aston Martin didn’t have sufficient issues, on Thursday (27 March), US President Trump drew world carmakers additional into his escalating commerce battle.
From 2 April, the US will slap a 25% tariff on all imported vehicles, placing a hefty premium on already-expensive marques like Aston.
On the plus aspect, delays to beforehand introduced tariffs from the US could recommend this thumping import tax isn’t a achieved deal. As well as, UK chancellor Rachel Reeves has stated the federal government is “in intense negotiations” with Washington to keep away from any automotive tariffs.
However simply the mere risk of commerce tariffs is sufficient to chill my bones. Final 12 months, gross sales to the Americas — dominated by demand from US prospects — accounted for 40% of group revenues, making it by far the corporate’s single largest market.
With all of its manufacturing positioned within the UK, Aston Martin can be particularly susceptible to any ‘Trump Tariffs.’
What subsequent?
It’s hoped {that a} string of recent automotive launches (together with the just lately revamped Vanquish and the upcoming Valhalla) will revive the corporate’s fortunes. However the extremely aggressive nature of the automotive market means success is under no circumstances assured.
And Aston Martin’s restoration is made much more troublesome given difficult financial situations in key markets. On steadiness, it is a FTSE 250 share I feel buyers ought to contemplate steering nicely away from.
