To some, the collapsing Aston Martin (LSE: AML) share price may look like the ultimate buying opportunity. The luxury car maker is a household name, forever linked with James Bond. Its cars drip with glamour, and its history stretches back more than a century. Few UK brands can match its allure.
Unfortunately, it’s also a deeply troubled business. Aston Martin has gone bust seven times since its original launch in 1913. It has always found new backers, with Canadian billionaire Lawrence Stroll taking the wheel in 2020. He made his fortune building businesses like Tommy Hilfiger and Michael Kors. So far, Aston Martin will have consumed a lot more cash than it has created.
I know how Stroll feels, albeit on a much, much smaller scale. I bought the stock for my SIPP in September 2024. I knew the risks and had misgivings, but couldn’t resist. The shares had fallen 95% over five years and were trading at just £1.62. They listed on the FTSE 100 in 2018 at £19. That looked like a huge discount. Surely worth a punt?
FTSE 250 struggler
And yes, I was aware of the old market warning that just because a stock has fallen 95%, doesn’t mean it can’t fall another 95%. I bought anyway. Nothing has changed. Now in the FTSE 250, Aston Martin shares still seem to move in one direction… down. At speed. They’re down 46% over the last year. And they’re still down 95% over the last five.
Today they trade at around 36p. So despite bagging the stock at a huge ‘discount’, I’m personally down 78%. Fortunately, I only invested a modest sum, hoping for a bit of action and adventure. I haven’t enjoyed it. Losing money is no fun, however small the stake.
One reason I’m writing this is that I’ve just read a glowing review of its new Valhalla supercar. A two-seat, 3.0-litre, carbon-fibre machine with a price tag of £850,000. It looks sensational. Sadly, the same can’t be said for the company behind it.
In February, Aston Martin reported a 21% drop in full-year revenue to £1.3bn. Underlying operating losses more than doubled to £200m, hit by a shift towards lower-margin models. Net debt rose by £200m to £1.4bn. That dwarfs today’s market cap of roughly £366m.
Deliveries fell 10% to 5,448 cars, with little improvement expected this year. The company has cut around 600 jobs, or 20% of its workforce, to save £40m annually. That was before Iran.
Tariff and oil price troubles
The headwinds keep coming. US tariffs, weakening demand and now rising inflation and energy costs add pressure. Aston Martin doesn’t have an electric option yet (its first isn’t due until 2030). Of course, the potential is still there. If global luxury demand rebounds, especially in China, sales could recover. I’d love to see Stroll turn it around. But right now, the risks dramatically outweigh the rewards.
I’m holding my small stake, more in hope than expectation. But I wouldn’t be surprised to see the shares plunge further from here. Shares can do that. I can see more rewarding bargains on the FTSE 150 and FTSE 250 today. I’ll target those instead.
