The Motley Fool

The Aston Martin share price has bounced! Time to snap it up?

Image source: Aston Martin

Anyone following the Aston Martin (LSE:AML) share price will know the company has had a horrid 2020.

But could shares in James Bond’s favourite carmaker be about to soar? Should you buy now? I’ll investigate the case for and against.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Looking at a recent chart of the Aston Martin share price it appears to have hit a floor or ‘bottom’ at just under 50p. This is a trading term that means there is a lot of support at this price level.

The Aston Martin share price has deflated 70% since the start of 2020. And it has fallen over 96% since its October 2018 IPO at a whopping £19 per share. So is there value in buying 50p bargain shares now?

Why the Aston Martin share price could rise

Reuters reported on Thursday 15 October that Daimler — the parent company of luxury brand Mercedes-Benz — saw sales bounce back in September 2020.

Data from the European Automobile Manufacturer’s Association released this month shows EU car sales rose 3.1% in September. This is the first increase of the entire year, and suggests a potential sector-wide recovery.

And as a fellow brand that appeals to the affluent, Aston Martin could see the same kind of sales and revenue bounce. That’s what speculative buyers are betting on ahead of the company’s third-quarter 2020 results, which are due out on 12 November.

There is an argument, too, that luxury car brands should be relatively unaffected by a pandemic that has wrought economic catastrophe on large swathes of the world. These brands cater to the super-rich, after all, who tend to be more insulated from economic shocks.


The DBX is Aston Martin’s first ever luxury SUV.

This is a section of the car market that exploded in popularity in the late 1990s with the likes of the Mercedes-Benz M-Class. The higher profit margins available from luxury SUVs were too great to ignore.

Even sniffy racing-focused brands like Porsche eventually had to concede. In 2003 it launched the Cayenne, to much handwringing about how the brand had lost its soul. But it was a sales hit. A big one.

Far from a disaster, it pushed Porsche back into profit from big losses.

Investors are hoping for the same from Aston Martin, only 20 years late to the party.

Why the Aston Martin share price could fall

Aston Martin has massive debt. Estimates have been reported in a range from £765m on a trailing 12-month basis to in excess of £880m. And a September 2019 fundraise of $150m to finance the cost of producing the DBX has made its future borrowing costs higher. Most of this borrowing matures in 2022. It could be refinanced, of course, but it will be expensive.

This puts immense pressure on the company’s balance sheet – and the Aston Martin share price, in tandem.

JP Morgan analysts suggest the high development costs of the DBX mean one thing. Aston Martin will burn cash at an alarming rate.

In a recent client note the bank upped its 2020 estimate for cash burn to £150m and dropped earnings projections by 10%. Much more medium-term cash is needed and the outlook “remains uncertain“, it said.

So a bet on the Aston Martin share price rising with positive results on 12 November is just that: a speculative bet. As the saying goes, you pays your money and you takes your chances.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

TomRodgers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.