Aston Martin Lagonda  share price outlook ahead of FY earnings

By:
on Feb 23, 2024
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  • Aston Martin Lagonda has been a major cash incinerator over the years.
  • Demand for its vehicles has jumped but the company faces substantial challenges.
  • It will publish its financial results on Wednesday next week.

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Aston Martin Lagonda (LON: AML) share price has drifted upwards this week as investors wait for the company’s earnings scheduled for Wednesday next week. The stock was trading at 173.6p on Friday, higher than the year-to-date low of 163p.

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Aston Martin earnings ahead

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Aston Martin Lagonda, the troubled premium car manufacturer, has come under intense pressure in the past few years as it became one of the worst performers in London. 

Its stock has already lost over 90% of its value from its all-time high and by 56% from its highest point in 2023.

This performance happened as the company battled its persistent cash burn, increased losses, and heavy dilution. It has constantly raised cash in the past four years to remain afloat. Most recently, the firm raised funds from Saudi Arabia, leading to a partnership with Lucid Group.

At the same time, the company has gone through serious product delays, including of its $3 million Valkyrie brand. According to Bloomberg, buyers of this car will need to commit to spend $450k servicing the vehicle.

Aston Martin has seen robust demand for its vehicles but the management has failed to transform this into a successful brand. That is partly because it has been burdened by debt, which it is now dealing with.

It is against this backdrop that Aston Martin will publish its annual results on Wednesday. These results will provide more colour about the performance of its business and the overview of its fundarising strategy.

The most recent Q3 results showed that its revenue rose by 21% to £1.03 billion while its gross profit jumped by 30% to £370 million. It also reduced its net debt by 10% to £749 million.

However, the company is still making substantial losses. Its loss before tax narrowed to £259 million during the quarter

In the first half of the year, the company’s loss before tax narrowed by 50% to £142 million. Therefore, the main concern among investors is that the company will dilute their shareholding some more this year.

Aston Martin’s performance is a polar opposite of that of other luxury brands like Ferrari. The most recent results revealed that Ferrari’s business was doing great, which has helped push its stock to the highest point on record.

Aston Martin share price forecast

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Aston Martin

AML chart by TradingView

Turning to the daily chart, we see that the AML stock price tumbled to its all-time low of 163.1p last week and has now rebounded ahead of its quarterly results.

The shares remains below the psychological level at 200p, which was also its lowest point in May last year.

It has also dropped below the 50-day and 100-day Exponential Moving Averages (EMA), signaling that bears are still in control.

Therefore, the outlook for the stock is extremely bearish, with the next target to watch being the YTD low of $163.1. However, in most cases, stocks tend to show some volatility before and after publishing their earnings. 

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