Aston Martin share price recovery has lost steam – buy the dip?

on May 3, 2023
  • Aston Martin stock has plunged by 32% from the YTD high.
  • The company’s results showed that the turnaround was continuing.
  • It is hard to recommend Aston Martin shares for now.

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Aston Martin (LON: AML) share price drifted downwards on Wednesday even after the iconic British luxury car company published strong results. The stock was trading at 212p, which was much lower than the year-to-date high of 306p.

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Aston Martin’s turnaround is underway

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Aston Martin Lagonda has shown that it is implementing its turnaround strategy well. In a report, the company said that its revenue in the first quarter jumped by 27% to over £295.9 million. This happened as the total wholesale volumes jumped by 9% to 1,269 vehicles. 

Aston Martin’ gross profit rose to £101.9 million. However, the rising cost of doing business pushed its losses higher as the operating loss rose by 7% to £50.9 million. Losses were mostly because of higher depreciation and amortization adjustments during the quarter. 

The company had several highlights during the quarter as demand for its vehicles rose. For example, the company unveiled DBS 770 Ultimate in January, with all the vehicles being sold out. Most importantly, Aston Martin Aramco Cognizant Formula 1 team is doing well. In a note, Lawrence Stroll said:

“Our partnership with the Aston Martin Aramco Cognizant Formula One®️ team has continued to drive significant brand awareness and growing demand from a new generation of customers, further amplified by its strong start to the season.”

Aston Martin’s struggles and losses show how behind the company is. For example, on Wednesday, Porsche said that its sales jumped by 25.5% in Q1 to over 10.1 billion euros. Its operating profit soared to 1.8 billion euros. 

The same is true with Ferrari, which will publish its results on Thursday. Analysts expect the company’s revenue to jump to 1.5 billion euros after selling about 3,800 units. 

Therefore, Aston Martin’s investors hope that the company can implement a successful turnaround since there is demand for its products. 

Aston Martin share price forecast

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AML chart by TradingView

So, is it safe to buy Aston Martin shares? I have mixed feelings about Aston Martin. On the one hand, I want to trust that Lawrence Stroll can steer the company into profitability in 2024. However, history suggests that we should be cautious since the Aston Martin share price has crashed by double-digits in his leadership.

The stock has moved below the 25-day and 50-day moving averages while the Awesome Oscillator has moved below the neutral point. Therefore, for now, I suspect that the shares will continue falling, with the next key level to watch being at 179.6p.


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