Aston Martin (LSE:AML) shares are down 69% over the past two years. That means a £10,000 invested then would be worth just £3,100 today. Someone buying a brand new Aston Martin DBX would have seen less depreciation in percentage terms.
What’s behind the fall?
The most immediate cause has been a string of disappointing financial results. Over the past two years, Aston Martin’s reported falling vehicle sales, with 2024 seeing an 8.9% drop in deliveries and a 3% decline in revenue to £1.58bn.
Concurrently, losses have mounted, with the luxury car company posting a post-tax loss of £323.5m for 2024, up from £226.8m the year before. Gross profit margins have also contracted, and persistent production glitches and supply chain disruptions have led to delays and inefficiencies.
Debt remains a millstone around Aston Martin’s neck. Net debt ballooned to £1.16bn by the end of 2024 and rose further to £1.27bn by March, with interest payments alone wiping out operating profits.
The company’s adjusted net leverage ratio stands at 5.1 times. This is huge and reflects the strain of high debt and declining earnings. What’s more, multiple emergency cash calls since 2020 have diluted shareholders and raised concerns about the company’s long-term viability. After all, it’s a loss-making car company with net debt now sitting above its market-cap.
External factors have also played a part. Weak demand in China, global supply chain snags, and the impact of new US tariffs have all weighed on sales and investor sentiment. Meanwhile, ambitious production targets — originally around 10,000 a year — have been quietly abandoned.
Turnaround hopes
Despite these challenge, there are glimmers of hope. New CEO Adrian Hallmark, who has a track record of turning around luxury brands, has pledged to deliver operational discipline and restore profitability within 12-18 months.
His strategy focuses on cutting costs, improving production quality, and launching new, higher-margin models, including the much-anticipated Valhalla, and three new derivatives in the second half of 2025.
Analyst forecasts for 2025 are mixed, with consensus estimates pointing to net revenue of £1.61bn, gross margins near 40%, and a return to positive adjusted EBIT for the full year. The company expects positive free cash flow in the second half of 2025.
However, the forecasts also show net income remaining negative until 2027, when it just turns positive. Understandably, this does mean finding fair value isn’t particularly easy.
The current consensus share price target is around 90p. That just 6% above where the stock is today. What’s more, seven of the nine analyst ratings are Hold ratings, with the remaining two being favourable.
Collectively, all of this suggests there are better deals to be found on the stock market today. Personally, I’m not going to be adding Aston Martin to my portfolio. However, I do hope it can deliver a recovery.
