Editor’s note: this article has been amended, after it originally incorrectly stated Aston Martin has gone bankrupt 13 times.
Investors hoped that Aston Martin Holdings (LSE: AML) would deliver on its promise to be a top UK growth stock when it floated on the FTSE 100 in October 2018. Aston Martin wasn’t just any car maker after all. It was the James Bond car maker.
And just like James Bond, the people running the show have to live up to the brand’s heritage while staying relevant and winning over a new generation of fans. The film franchise has done this better than the car maker.
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Can the shares ever find their way?
I’ve been reading original press reports from flotation day and they already feel like historic documents. Aston Martin’s debut was deemed disappointing. Its shares were originally priced at between £17.50 and £22.50, opened at £19 and slumped to £17.75. That was only a taster of what lay in store.
Today, just over six years later, they trade at £1.10. That’s a drop of 94.2%. The market cap has plunged from more than £4bn to just £1bn, propped up by the board coming back for more cash. The misery doesn’t stop. Over 12 months, the stock is down 51.24%. It resides in the FTSE 250.
If the Aston Martin share price was a car, it would keep the AA very busy. Yes investors can’t seem to let it go. When the board came back for more cash after issuing its second profit warning in quick succession on 27 November, it quickly raised £210m through share and private debt placings. Its balance sheet is safely shored up, for now.
So why do investors keep coming back? First, there’s the obvious glamour. The renowned British marque has a 111-year history and then there’s that film franchise. Second, it does make exceptional cars.
I’m holding my shares but won’t buy more
The challenge is finding people who are able to pay £200,000 for them. That’s got harder as China slows, and most of the world follows suit. Luxury is a tough market right now. Interest rate cuts would help, especially since Aston Martin’s net debt pile is roughly the same size as its market cap. We’ll have to be patient.
Stupidly, I bought Aston Martin’s shares on 16 September. I already feel like a veteran investor, having endured two profit warnings. There have been some good days but mostly bad days, with my shares down 33%. Still, at least it hasn’t gone bust. It’s done that seven times over the last century or so.
I saw Skyfall over the weekend with my 13-year-old son and he still gasped when the original 1964 Aston Martin made an appearance. Spoiler alert: the car was riddled with bullets and blown up. Rather like the shares.
Action heroes always go through agonies before winning in the final reel. Otherwise it wouldn’t be fun. I’m holding on to what’s left of my Aston Martin shares and hoping new leading man CEO Adrian Hallmark can save the day in 2025. I think it’ll take a lot longer than that, if he can save it at all. I’ll be watching, but I won’t buy more.
