Aston Martin Lagonda share price has remained in a freefall this year as the company’s challenges continued. It slipped to a low of 98.10p on Wednesday, its lowest level this year and 52% below its highest point this year. AML has dropped by over 97% from its all-time high.
Aston Martin share price falls after cash raise
The AML stock price has been in a strong downtrend after the company raised £111 million by issuing new shares. It also raised another £100 million in debt to boost its balance sheet as challenges remained.
Raising cash in the equity market is seen as a bad thing because it usually dilutes existing shareholders who own less of the company. Also, the debt aspect was also notable because Aston has been fighting to reduce its substantial debt load in the past few years.
Aston Martin has raised cash several times in the past. Most of these funds came from Saudi Arabia’s PIC, which is now a major shareholder in the company. Other funds have come from Yew Tree, a consortium led by Lawrence Stroll and Geely Holding.
The new fundraising gives Aston Martin with about £500 million in liquidity, which will be enough to push it in the near term.
Aston Martin is also struggling in the manufacturing process, which has seen some of its vehicles delayed. The most recent product delay is that of some Valiant models, which will push its EBITDA to between £270 million and £280 million.
Just in September, Aston Martin slashed its guidance, citing the ongoing supply chain issues in China.
AML sales trajectory is worrying
The most recent results showed that Aston Martin’s wholesale volumes dropped by 17% in the first nine months to 3,639. Its revenue fell by 4%, while its gross profits rose by 2% to £376.9 million.
The last quarter was fairly good for the company as its sales volume rose by 14% to £1.6 billion, while its revenue jumped to £391 million. The company also narrowed its quarterly loss by 55% to £21.7 million.
Aston Martin, under Adrian Hallmark, the new CEO, is working to release more models to grow its sales. It has recently launched Vanquish, a vehicle that has been received well. Its other models like Vantage, DB12, Valhalla, and Valour have also been doing well this year.
The challenge, however, is that the company’s balance sheet is not strong enough, which may see it raise cash again.
Aston Martin’s performance pales in comparison from that of Ferrari, a luxury autmomaker that has become a $80 billion juggernaut. Ferrari’s stock has jumped by 18% this year as the company continued releasing new models.
Aston Martin Lagonda share price analysis
AML stock chart by TradingView
The weekly chart shows that the AML stock price has been in a strong downward trend in the past few months. Past attempts to predict a rebound have largely proven wrong as it has continued falling.
The stock has remained below the 50-week moving average, while the MACD indicator has moved below the zero line. Also, the Relative Strength Index (RSI) has continued falling and is hovering slightly above the overbought level.
The Aston Martin share price has moved below the 23.6% Fiboncci Retracement level. Most importantly, it has formed a double-bottom pattern, which is a bullish view.
Therefore, the contrarian case is where the stock rebounds to the important resistance level at 397.2, its highest level in July 2023, which is about 300% above the current level.
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