Aston Martin (AML.L) plunged in value last Thursday — this fall in investor trust came during reports that the car company is seeking investors to balance its finances.
The car manufacturer, which is the centrepiece of the fictional British spy James Bond, may be open to offering a seat on its board of directors as a way of furthermore attracting new investors in gaining a stake that would be an estimated value of £200m.
Reports from Autocar say that a firm associated with a Saudi Arabian investment fund, as well as a second fund existing on America’s West Coast are the two largest competitors for this round of funding for the post-lockdown company.
However, it couldn’t be confirmed as to what timeline they are operating by, for completing negotiations, other than that there is substantial need for expediency in order to secure Aston Martin’s value proposition in the short term.
Doubled Losses
Aston Martin has been around since 1913. Not only is it associated with the James Bond franchise, it is also a cultural icon for British culture, with more than hundred and 60 dealerships globally, putting it into the global automotive brand territory.
Overall, the company has seen diminishing demand for its brand in Europe, Africa, and the Middle East, with a dive in demand by nearly a fifth. Its CEO, Andy Palmer, put this weak performance down to weaknesses in its markets as well as the macroeconomic uncertainties of the times.
It’s also no stranger to having to declare bankruptcy, currently having a total debt of about £1.2bn. In the first quarter of 2022, it saw a pre-tax loss of more than 110m, which was twice as much as the quarter previous, despite revenue increasing by 4% (and by 6% for the first six months).
In response, this executive automotive company is implementing a transformation strategy driven by its billionaire CEO Lawrence Stroll, who himself saved the company from the brink of failure in 2020.
The company also reportedly intends to make the switch to electric vehicles in response to tackling carbon emissions. Overall, the stock has seen a 96% drop in its value since its first IPO on the LSE in 2018, when it had an initial valuation of $4bn.
The company admits it doesn’t expect its fortunes to improve in 2022, however is optimistic about the ability of its new DBX SUV to contribute to more than half of its revenue in the future.
Outlook
They are from the S&P global PMI recently found their UK manufacturing had entered a slowdown., Reaching a two-year low since May 2020 with the first series of pandemics.
Indeed, Aston Martin manufacturing is headquartered in Warwickshire, UK — and joins our wider pool of companies who are experiencing a plummet in orders and supply and demand forces. Between May and June, there was a drop of 8% in companies who expected increased production.
This contraction of the British economy is likely to last for a long while, leading to generational recessions. With a British living squeeze , there was an all reduced demand for luxury and non-essential consumer goods.
Despite this general poor outlook for the British economy, Aston Martin has vintage investment appeal which doesn’t mean its valuation will continue to plummet, but does make it less likely that it will go completely bankrupt — indeed, a battle already seems underway between two large investment funds to shore up its capital.
