Earlier in October, when the Aston Martin Lagonda (LSE:AML) share price was hovering around the 75p mark, I read an online exchange of views about the future direction of the luxury sports car maker.
One of those involved in the conversation wrote: “Sure, the Rolls-Royce share price was 75p five years ago”. The implication being that Aston Martin’s share price could follow that of the aerospace and defence group’s and grow exponentially by October 2030.
Whether the author was being slightly tongue-in-cheek or wildly optimistic, it’s impossible to tell. But reading today’s (29 October) earnings release for the three months ended 30 September (Q3 25), it looks to me as though any sustained increase in the group’s market-cap is unlikely any time soon.
Having said that, by 8.45am, it share price was up 0.5% at 65p. But I know it’s the long term that really counts.
Some numbers to consider
Investors have been digesting the news that 1,430 vehicles were delivered during the period compared to 1,641 a year earlier. In percentage terms, the group now expects a “mid-to-high single digit” decline in wholesale volumes in FY25 versus the 6,030 sold in 2024.
The Q3 25 loss before tax was £111.9m. It hasn’t reported an annual profit since 2018 and it looks as though this year’s going to be no different. Inevitably, this has weakened the group’s cash position. Compared to the end of 2024, net debt’s now £164.5m (13.5%) higher.
Today’s update follows a series of disappointments since the group became a listed company in October 2018. When the group made its stock market debut, it was valued at £4.33bn. Today, it’s down to £658m.
And yet it produces some of the most beautiful cars, has an iconic brand, impressive heritage, and is synonymous with engineering excellence. Incredibly, it claims that 90% of the 110,000 cars it’s manufactured since 1913 are still on the road.
Impressively, the marque still holds the record for the most expensive British car sold at auction. In 2017, a 1956 DBR1, winner of Le Mans in 1959, sold for $22.55m (£17m at today’s exchange rate).
What next?
But the group’s clearly in a difficult position. And to be honest, if I was running the company, I wouldn’t know what to do. It’s taken “immediate actions” to reduce capital expenditure and cut overheads. But its options are limited. Selling more of a product with an average retail price of £194,000 is difficult. Deliveries of its £850,000 Valhalla supercar started this month so that should help.
But with supply-chain inflation being a persistent problem, it’s going to be hard to increase its margin. For the first nine months of FY25, the group’s reported a gross profit margin of 28.3%. By comparison, Ferrari’s was 49.9% in 2024.
And there’s nothing it can do about what it describes as “significant macroeconomic headwinds” with US tariffs affecting sales in North America and weak demand in China.
Overall, it would be far too risky for me to invest in Aston Martin. Anecdotally, there appears to be a lot of goodwill shown towards the company and its brand. Any sign of an improvement and its share price could do well. But judging by today’s earnings release, I think this could be a long way off.
