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Aston Martin Lagonda has surely faced more obstacles on its road to profitability than James Bond while driving its supercars. The fictional spy’s favourite carmaker is raising £125mn and confirmed its year-end expectations of profitability. And yet the shares still feel like an investment for racing hearts rather than cool heads.
Since its public flotation in 2018 at £19 a share, Aston Martin has burned through £2.2bn in cash and raised more than £3bn in additional capital on seven subsequent occasions.
Investors were cheered by this latest capital raising. Yew Tree, the consortium led by billionaire and AML chair Lawrence Stroll, will invest a further £53mn taking its stake from 28 per cent to 33 per cent, regulators permitting, and the company will sell shares in the Formula 1 racing team that it sponsors. In total the two transactions will raise £125mn.
Brakes on Aston Martin’s journey to profitability have included supply chain disruptions from the Covid-19 pandemic and upsets such as the flooding last year of a Swiss aluminium plant that hit several luxury-car makers. China’s economic slowdown has cooled a promising growth market. And US President Donald Trump’s 25 per cent tariffs on imported cars — AML’s plants are in Wales and Warwickshire — are going to dent its biggest single market, worth some 30 per cent of sales.
Chief executive Adrian Hallmark, brought in by Stroll last year, said this week that he plans to counter the impact of tariffs with a combination of cost cuts and price rises. Hallmark did not detail the size of the increases, but Ferrari this week said it would add 10 per cent on some models.
Since listing, Aston Martin’s market value has slumped from £4bn to about £650mn. Meeting its year-end goal of free cash flow would be a sign that the carmaker has turned the corner. Yet, even so, it is hard to imagine the carmaker regaining much lustre amid tariffs and potential demand destruction.
Investors hoping to see a bump in the share price are left pinning their hopes on takeover speculation — a perennial with a share register also containing Chinese carmaker Geely, Saudi Arabia’s PIF and Mercedes-Benz. James Bond gets that sort of luck. So far, Aston Martin has not.