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How to buy & sell Aston Martin shares
Looking to add some high-powered luxury to your portfolio with Aston Martin shares but don’t know where to start? Use our guide on how invest in AML shares to put your foot on the investing accelerator.
How to invest in Aston Martin
Aston Martin: the UK’s only independent luxury carmaker
Aston Martin Lagonda (AML) is one of the most storied names in automobile history. It’s a byword for luxury motoring, spoken about in the same tones as Rolls-Royce or Bentley. Founded in 1913, the brand has grown substantially, following historic motorsport wins in the 1950s and being the marque of choice for James Bond in many of the super spy’s most iconic outings.
The brand has continued to expand its line-up without compromising on its core ethos: fast, supremely engineered, beautiful motor cars. Aston Martin currently offers four models in its core line-up and has recently entered the highly lucrative luxury SUV space with the DBX. It also offers several limited-edition models, including the track-day orientated Valkyrie and its road-legal hypercar equivalent the Valhalla, plus an ongoing partnership with high-end design house Zagato.
In order to move with the times, Aston Martin is also planning to introduce hybrids to its line-up, with the goal of 20-30% of its range being powered by hybrid engines by 2024.
Additionally, Aston Martin will be participating as a manufacturer team in the 2021/2022 F1 world championship after breaking with Red Bull.
There has even been hints of Aston Martin expanding beyond the road, turning its attention to boats, aircraft and even submarines in the future.
The state of Aston Martin’s business
While its luxury image and high-performance vehicles is appealing to the moneyed rich, 2020 and the Covid-19 pandemic struck Aston Martin Lagonda with something of a hammer blow.
Revenues plunged as luxury goods, like the expensive supercars AML produces, saw a massive decline as pandemic caused a global belt tightening. Aston Martin’s 2019 revenues clocked in at £650m. In 2020, total revenues amounted to £270m. Retail sales of AML vehicles dropped from 4,482 units, to 2,752 across the last year.
The company has also taken on a lot of extensive debt. It raised $1.1bn in additional capital last year, but at an interest rate of 10.5%, which may cause investors looking at Aston Martin shares to feel a touch uneasy. For instance, Royal Dutch Shell’s issued debt in 2020 with a 2.4% interest rate, which may suggest AML had to offer investors a lot so they would stump up the cash.
Aston Martin Lagonda also issued an additional £250m worth of shares in 2020 to further raise money. This could be for two reasons: firstly, to continue to focus on R&D efforts to improve its model range, especially with its self-imposed hybrid drive targets. Secondly, it could mean Aston Martin is just using its capital to fill the massive hole left by the revenue drop. If that’s the case, then it will need to outperform previous years in order to cover its debts.
But there are reasons to be cheerful: the appointment of former Mercedes executive Tobias Moers as CEO and billionaire Lance Stroll as Executive Chairman are considered by market to be top notch appointments for a company that has been criticized for poor management in recent years.
Stroll acquired a 16.7% stake in AML in April 2020. Mercedes now also owns a 20% stake in the carmaker and has supplied engines for the Vantage model. Lance Stroll will be a significant figure in Aston Martin’s F1 plans, rebranding his Racing Point team to Aston Martin Cognizant.
Looking at the Aston Martin stock price
AML’s pre-pandemic share price was 3,422p but Covid-19, but that had fallen to 983p by March – its lowest level that year.
AML actually launched its IPO with the worst first-day performance of any newly listed stock in 2018. Its IPO launched at the low-end of market cap forecasts, with Aston Martin’s valuation coming in at $4.3bn vs $5bn. It dipped to an all-time low of 371p in August 2019, following the US-China trade spat dimming demand for luxury cars.
Between November 2020 and February 2021 though, AML shares had risen 96%, apparently backed by the efforts of the new board to raise capital and cover revenue losses. At the time of writing, Aston Martin shares were trading at 2,220p.
The change in the management team, especially the addition of Tobias Moers bringing his years of experience at Daimler/Mercedes to the table, has been identified as a good move for.
Aston Martin share prices may continue their upward trajectory in 2021. Vaccine rollouts and tumbling Covid-19 cases and hospitalisations in key markets, like China and the US, suggests a return to normality. If belts can be loosened, those who can afford it may start looking to update their garages with an AML model.
Lance Stroll’s F1 experience could also help position Aston Martin as a potential F1 challenger and also revitalise its brand image amongst younger F1 viewers, putting back in the same space as Ferrari and Lamborghini hold in younger petrol head’s hearts.
The addition of the DBX SUV could be a very shrewd move on AML’s part. When Porsche introduced its Cayenne in 2002, it essentially saved the company, and outsells even the more affordable Boxter and iconic 911 every year. Bentley and Rolls-Royce have also had great success with their SUV offerings recently. Strong sales of the DBX may help regain revenues, and thus potentially improve share prices.
Investing & trading Aston Martin shares
Investing and trading are related but fundamentally different concepts. If you want to trade or invest in Aston Martin shares, you will need to understand the difference.
Investing in AML stocks
When you invest, you buy shares outright. That would mean you would own your Aston Martin shares. Investors buy shares in the hope they will increase in price so they can be sold for a profit at a later time. Investing is typically a long-term strategy.
Trading AML shares
Trading stocks uses derivative products like stock contracts for difference (CFDs) or spread bets. This means they take their value from the underlying market the asset is drawn from. If you were to trade Aston Martin shares, you would not own them. Instead, you can potentially make a profit on the share price movement from rising or falling shares. Traders often take short to medium-term positions, instead of long ones.
We offer trading stock CFDs and spread betting on our Marketsx platform.
Trading & investing risks
Both investing and trading is inherently risky, but the risks associated with each activity differ.
When investing in Aston Martin shares, your risk is limited to your initial outlay, i.e. the amount you paid for the stocks. For example, if you spent £1,000 buying shares, all you could ever lose would be £1,000, even accounting for share price movements.
Trading, however, is done with leveraged products (CFDs, spread bets). Leveraged products allow traders to open positions by placing down a percentage of the asset they wish to trade’s initial value. That can help maximise profits – but it can also mean you make significant losses if your trade moves against you.
Analysing Aston Martin shares
Before you decide to purchase any shares in Aston Martin Lagonda, make sure you do your due diligence. Fundamental and technical analysis will help you decide if Aston Martin shares are right for your portfolio.
Technical analysis looks at stock price data and movements. It includes analysing patterns and trends that may show future market movements. Fundamental analysis is based around estimating how much a stock is worth through factors relating the economy, industries, and companies.
Things to watch out for when analysing stocks include:
- Company news – Is Aston Martin preparing to release a new model? Has there been a takeover bid or a more investment?
- Personnel changes – Have any new faces been added to the Aston Martin management team recently? Has anyone left the company?
- Financial events – Has there been an earnings report published recently? What is Aston Martin’s revenue like for the year or quarter ahead?
If you would like more information, we’ve broken down the key fundamental and technical stock analysis factors in our guide on how to pick stocks.
If investing in AML shares, be aware of these other tips:
- Research & due diligence – Understand the business or asset you plan on investing in. It’s not good charging into investing in oil without first understanding at least a little about the industry, the companies involved, and the current market. Try and get a good grounding in the background before committing any capital. Fundamental and technical analysis can help here, which we’ll cover later.
- Use your head, not your heart – It might be a bit hard to do but try not to be ruled by emotion. Just because there is hype around a particular stock or asset does not mean it is suitable for you. Do not rush into buying or selling decisions. It’s important to remember trading and investing is risky so try and keep a clear head.
The Hut Group float – quick take
The next Ocado or another Aston Martin? Online retail group The Hut Group (THG) plans to float on the London Stock Exchange. This is a major boost for the London market with the £4.5bn tag making this the biggest listing of the year.
A full seven banks/brokers are working on the deal, so good tidings all around the City. But what of the individual investor?
After a considerable ramp in tech valuations this year – eg, Ocado +100% in the last 12 months – this looks like a well-timed move, at least on the part of the founder who is due a bumper £700m payout should all go well and still remain very much in control. The question is whether this 10% margin business deserves a tech rating.
A standard listing makes it ineligible for inclusion on the FTSE index although its mooted market cap would be enough just to make the FTSE 100. Any standard listing raises eyebrows as it means no index inclusion and lower governance standards.
And we note that it’s another banker buffet – four of the same banks from Aston Martin’s listing are on the IPO – Goldman, JPM, HSBC and Numis (in addition to Citigroup, Barclays and Jefferies).
Indeed, Goldman’s Duncan Stewart and Anthony Gutman, named on the THG registration document today, were also down on the Aston Martin registration document in August 2018. Let’s hope THG enjoys a better time on the public markets than AML.
Is THG a tech company or a retailer?
THG describes itself as a ‘vertically integrated digital-first consumer brands group’, retailing its own brands in beauty and nutrition, including Myprotein and Lookfantastic, as well as third-party brands. It does this via a proprietary technology platform dubbed Ingenuity.
The business is divided into three core divisions – Beauty, Nutrition and Ingenuity. Whilst the Beauty and Nutrition brands have delivered strong growth, the real value in the shares may well come from the tech platform.
In 2019 THG achieved year-on-year revenue growth of 24.5% to reach £1.1 billion with adjusted EBITDA of £111.3 million. The float aims to raise £920m and would value the company at £4.5bn, which at c40x last year’s EBITDA and x4 sales doesn’t seem like too much to pay for this kind of growth….or does it?!
The answer rests surely on whether it deserves a techy or a retail multiple. Ocado trades in the region of x300 after an unbelievable rerating – but that is another story altogether. THG growth has accelerated in the first half of 2020, with revenue of £676 million, up 35.8% on the equivalent prior year period…but it’s all coming from the Beauty and Nutrition segments, not Ingenuity.
Ingenuity platform – a key growth driver?
Ingenuity has a capital-light, scalable licensing model that offers good revenue opportunity beyond the core retail division. Management are keen to stress that Ingenuity secured £215 million in life-of-contract revenue in the first six months of the year amid an uptick in demand.
Management view the platform as one of THG’s key growth drivers and as a fully scalable solution available to brands at a time of immense e-commerce growth – direct to consumer (D2C) in particular – it has strong potential. The prospectus outlines a target for overall revenue growth of 20-25% over the medium term, with Ingenuity forecast growth of 40% primarily as a result of increasing mix of e-commerce revenues as global brand owners accelerate their adoption of D2C strategies.
But revenues from Ingenuity remain relatively small – £61m in the first half of 2020, which was flat on last year and less than 10% of total group revenues. As a percentage of group revenues, the contribution from Ingenuity is going down. For the moment it looks like a retailer trying to pass itself off as a tech platform. Ocado has managed to pull this off – can THG?