The Aston Martin (LSE:AML) share price appears at first glance to be a bargain. A grand British marque at a low price. Some investors can’t help themselves when faced with such a globally-recognised name.
I had posters of the DB7 on my wall as a kid — this storied racing brand made the sexiest-looking cars I’d ever seen.
Ask any car nut his or her favourite models of all time and there will be an Aston Martin or two in there. From 1932’s vintage open-top Series 2 to the DB4 in 1958, then James Bond’s DB5 made famous by Goldfinger in 1964. The grand tourers were the epitome of British luxury, silken style, raw power and speed.
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So what could be better than seeing the Aston Martin share price languishing in the depths and scooping up a bargain?
One of the fun things about investing as you get older is being able to take a slice of the companies you really love. Publicly-traded brands like the NYSE-listed Manchester United or Borsa Italiana’s Juventus invoke the same kind of rabid devotion.
We might not all be able to afford a beast like a Vantage Roadster or a DBS Superleggera. But seeing the Aston Martin share price every time you open your trading app or Stocks and Shares ISA? That’ll give you a little thrill.
Aston Martin share price woes
At around 70p a share, the FTSE 250 brand has sunk to ever greater lows.
Sold at £19 in its October 2018 IPO, the Aston Martin share price has since shed 96% of its value. From £4.3bn to £1bn in a little over a year.
Sitting on these kinds of losses will set your heart racing, and not in a good way.
Yes, the lure of heritage, speed and craftsmanship remains strong. After all, Ferrari takes pride of place in popular FTSE 100 fund Scottish Mortgage Investment Trust.
Aston Martin has survived seven bankruptcies and multiple ownership changes.
But the bad news keeps piling on. Losses widened to £100m in the latest full-year results. And Covid-19 has hammered sales, falling 33% over the last quarter.
That epic loss led to Aston axing 500 staff. Bosses decided to drop front-engined sports cars from their production schedule to focus on the higher margin DBX SUV.
And a March 2020 £536m rescue deal led by Lawrence Stroll saw the Canadian billionaire injecting £75m in short-term funding. But still institutional investors are fleeing to the hills. Its second-largest shareholder, Investindustrial Advisors cut its stake by 5% recently.
Heart, meet head
So to answer the question in the title, I really don’t think Aston Martin is a bargain worth snapping up. And I’d sell if I owned it too. Selling out of poorly-performing investments after a share price crash is one of the hardest things you’ll have to do as an investor. The doubt. The recriminations. Hiding it from your spouse (I don’t recommend the latter, by the way).
It happened to me more often than I care to admit. Nearly always when I made a decision with my heart, rather than with my head.
Investing with cold, emotionless logic based on EPS growth, debt, and improving sales and profits isn’t quite so fun. But I believe it will get you a lot closer to your first slice of luxury than the Aston Martin share price will.
