It has been a horrible few years for long-suffering shareholders in luxury carmaker Aston Martin Lagonda (LSE: AML). The 20% share price fall in 2025 is bad enough, but over five years the Aston Martin share price has tumbled 84%.
However, on the final day of April, the company made what I see as a significant announcement. Since then the Aston Martin share price has leapt 28% in a matter of weeks. I think it could go substantially higher from here.
Could there be an end to cash burn?
Back in April, Aston Martin announced its first quarter results – and they did not look that good to me. Revenues and gross profit both fell year-on-year. The loss before tax shrank considerably compared to the prior year period, but was still substantial. At £80m, it was equivalent to around 34% of the £234m revenue for the quarter.
Despite all that though, the company maintained what it called its “key financial targets”for 2025: positive adjusted EBIT (earnings before interest and tax) for the full year and free cash flow generation in the second half.
That suggests that Aston Martin’s management has a high level of confidence it will turn free cash flow positive in the second half.
One of the things that has been dragging down the share price is Aston Martin’s big debt pile and ongoing negative cash flow. The prospect it might reverse that helps explain why the Aston Martin share price is up by over a quarter in under two months.
If there is more news showing the business is on track to turn cash flow positive – and then if it actually does I think it could give a further substantial boost to the Aston Martin share price.
Lots to look forward to!
Now note that the company is talking about overall cash flow, not just operating cash flow. One way to turn cash flow positive would simply be to issue enough new shares (diluting existing shareholders) or borrow more money. Aston Martin had done both repeatedly since listing on the stock market and could so again.
But perhaps operating cash flows will transform for the better. The company reckons that the second half — and especially the fourth quarter — will be important when it comes to hitting those targets. An expanded SUV offer, thanks to the launch of the DBX S, should help.
A key factor should be Aston Martin beginning deliveries of its Valhalla supercar in the second half. At a reported starting sales price of around £850k each, the Valhalla could make a significant financial contribution to Aston Martin.
I’m not buying (car or share!)
Some petrolheads see that price as a relative bargain, but I certainly shall not be buying a Valhalla.
What about the share though? After all, the Aston Martin share price is in pennies: I could buy almost 1m for the cost of an entry level Valhalla!) I do think we could see a significant move upwards this year if the firm meets its targets.
For now, I will not be buying. Aston Martin remains heavily loss-making and indebted. I would want to see hard evidence of improved financials before even thinking about touching the share – not just an upbeat forecast.
