Luxury carmaker worth a fraction of its £19 a share October 2018 listing price
Aston Martin downgraded sales forecasts from 7,250 cars to 6,400 in 2019.
Photograph: Buzz Pictures/Alamy
Shares in Aston Martin Lagonda tumbled to a new low as pressure continued to mount on the British luxury carmaker amid a broader market rout.
The shares fell by 21% at one stage on Thursday, to a record low of 371p. This is more than 80% below the £19 price when the company listed on the London Stock Exchange in October. They later recovered much of the loss to close at 445p, still down 4.9% on the day.
The carmaker, based in Garydon, Warwickshire, last month downgraded its sales forecasts for 2019 from about 7,250 vehicles to 6,400, citing macroeconomic uncertainty in the UK and Europe, which face slowing growth and the threat of a no-deal Brexit at the end of October.
Aston Martin’s weaker sales in the first half of the year – at a time when it needs to fund a new factory to build a make-or-break SUV, the DBX – have led many investors to question whether it will need to raise more money, potentially diluting the value of shares.
The worsening outlook has added to financial pressures. Moody’s ratings agency downgraded its rating on Aston Martin’s debt in July, making it more expensive for the carmaker to borrow money. Hedge funds have also taken out a record level of short bets that its debt will fall in value, the Financial Times reported this week.
Aston Martin made a loss of almost £80m in the first half, and Tobias Wagner, a senior analyst at Moody’s, cited its lack of sales growth and struggle for profits for the downgrade. He said Moody’s still viewed Aston Martin’s access to cash as adequate, but the broader weak environment in the UK and Europe and the continued need for heavy spending mean it could be squeezed.
“Meaningful negative free cash flow for 2019 and for 2020 do mean we see the liquidity profile weakening,” Wagner said, before the share price fall.
One equity analyst who covers the company said the downward move in Aston Martin shares was likely intensified by the broader negative mood on global stock markets, meaning few buyers were available for shares.
The FTSE 100, of which Aston Martin is not a member, hit a five-month low on Thursday. Markets across the world have been rattled by fears of a recession after the inversion of the US and UK government bond yield curves, a sign that investors believe a contraction is imminent.
Aston Martin declined to comment.