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Aston Martin share price analysis: chart points to a 40% drop

By: Invezz

Aston Martin Lagonda’s (LON: AML) share price collapsed to a low of 128p on Wednesday, its lowest level since November 2022. The stock crashed by over 65% from its highest point in 2023. It has lagged behind other UK companies now that the FTSE 100 index has soared to a record high.

Aston Martin’s woes are continuing

Aston Martin, the biggest luxury vehicle company in the UK, is facing substantial challenges and it is unclear whether it will survive. 

The company published an extremely weak financial statement. Its wholesale volumes dropped by 26% in the first quarter to 945. Unit sales dropped across all regions, with the worst region being in the UK. Its revenue dropped by 10% to £267 million, helped by higher prices.

Aston Martin Lagonda’s adjusted EBITDA dropped by 34% to £19.9 million. Most importantly, its loss after tax soared by 87% to £138 million while its net debt jumped by 20% to over £1 billion.

These numbers mean that the company’s turnaround strategy has failed, which explains why the management decided to replace the CEO. It also means that the company will likely raise more money in the coming months. 

Aston Martin has been working to boost its balance sheet in the past few years. It has already raised cash from Saudi Arabia and Lawrence Stroll. However, there are signs that these actions are not working out as its debt has continued rising.

Aston Martin believes that the company will continue doing well as it launches four new models this year. As such, it expects that the wholesale volumes will ramp up later this year. 

However, launching new models is also expensive, meaning that it will take longer for the company to become profitable. Worse, the company noted that its performance for the second quarter will be in line with in Q1.

Aston Martin share price forecastaston martin share price

AML chart by TradingView

The daily chart shows that the AML stock price has been in a strong bearish trend for a long time. Its attempts to recover in 2023 failed when it reached to a high of 396.2p. The stock formed a death cross pattern in November last year when the 200-day and 50-day moving averages crossed each other.

Aston Martin’s stock crashed below the lower side of the falling wedge pattern that is shown in black. Therefore, the outlook for the stock is extremely bearish with the next point to watch being at 84p, its lowest point in November 2022. If this happens, it means that the stock will crash by about 40%.

The post Aston Martin share price analysis: chart points to a 40% drop appeared first on Invezz

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