The Motley Fool

This is why the Aston Martin share price has spiked 10%!

Image source: Aston Martin

The Aston Martin Lagonda (LSE: AML) share price has leapt on Thursday following the release of full-year results. Up around 10% on the day, the luxury carmaker has broken through the £22 per share barrier once again. It’s now trading at its most expensive since the beginning of February.

Unsurprisingly, Aston Martin’s trading in 2020 was something of a horror show. Total revenues collapsed 38% year-on-year to £611.8m as Covid-19 smashed demand for its premium vehicles. Retail sales plummeted almost a third, to 4,150 vehicles, it said. And wholesale sales (sales to dealerships) tanked 42% to 3,394.

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...

As a consequence, Aston Martin’s pre-tax losses ballooned from 2019 levels. This came in at £466m versus the £119.6m loss it racked up in 2019. But poor sales weren’t the only reason why the carmaker’s bottom line took a battering last year.

Aston Martin also had to write off a whopping £98m which was primarily due to “the impairment of capitalised R&D due to technology and cycle plan changes,” it said. This reflects, in large part, the scrapping of the company’s planned Rapide E electric vehicle.

Aston Martin’s sales improve

In better news, Aston Martin explained that trading has picked up significantly in recent months. This accounts for the positive reception to today’s trading statement and the subsequent share price explosion.

The sportscar maker said revenues were up 3% in the final three months of 2020. This is even though sales volumes continued to contract on an annualised basis. Retail sales sunk 15% to 1,398 cars while wholesale sales dropped 4% to 1,839 vehicles.

Aston Martin said fourth quarter turnover benefitted from a full quarter of deliveries of its best-selling DBX sports utility vehicle. It also saw the number of Special vehicle sales more than treble between October and December from the previous quarter.

A bold outlook

Aston Martin struck an optimistic tone for the year ahead too. It expects to make wholesale sales of 6,000 this year, up around three-quarters from last year’s levels. It also expects to report an adjusted EBITDA margin in the “mid-teens”, it said.

The car manufacturer announced ambitious plans to supercharge sales by the middle of the decade too. It intends to increase wholesale sales to 10,000 units by 2024/2025, it said. And it has its sights set on making £2bn worth of revenue, and around £500m in adjusted EBITDA by then.

As for this year, Aston Martin said “the uncertainty surrounding the duration and impact of the pandemic on the global economy continues, with the pace of emergence from lockdown and recovery in consumer demand varying significantly across geographies.” But it also said trading to date has been in line with expectations.

City analysts reckon Aston Martin will remain loss-making in 2021. But they expect pre-tax losses to narrow to £194m. More losses are anticipated for 2022 too, although they’re predicted to narrow again, to £159m.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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

Royston Wild 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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 click below to discover how you can take advantage of this.