The Aston Martin share price dropped 12% in two days. Would I buy AML today?

first_imgSimply click below to discover how you can take advantage of this. Cliff D’Arcy | Saturday, 12th December, 2020 | More on: AML Our 6 ‘Best Buys Now’ Shares Enter Your Email Address The high-calibre small-cap stock flying under the City’s radar Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! 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Image source: Aston Martin center_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Although I’m no petrolhead (indeed, I rarely ever drive), I’ve long been an admirer of Aston Martin‘s luxury cars. Perhaps it’s the association with the late Sean Connery as James Bond, but I’ve always regarded Aston Martin as a leading aspirational brand. In late 2018, Aston Martin Lagonda Global Holdings (LSE: AML) floated on the London Stock Exchange, giving the public an opportunity to invest in this iconic company. What has happened since to the Aston Martin share price has been a brutally painful lesson for investors.The Aston Martin share price crashWhen the luxury carmaker returned to the stock market in October 2018, it priced its shares at £19 apiece. This valued the 107-year-old brand at a tidy £4.3bn. This was a very rich valuation, given that AML made only £87m pre-tax profit in 2017 and a £163m loss in 2016. Also, the company was being floated by private-equity owners, who load up businesses with debt so as to extract maximum value. As a result, the Aston Martin share price headed south almost as swiftly as its supercars accelerate from 0-60mph.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…By the end of 2019, just 14 months after its IPO (initial public offering), the Aston Martin share price had crashed to 167.64p. That’s a collapse of more than nine-tenths (91.2%) from the float price. Then a ‘white knight’ investor rode to AML’s rescue. Canadian billionaire and Racing Point F1 Team owner Lawrence Stoll and others agreed to pay £182m to buy a quarter of Aston Martin.Covid-19 wrecks Aston MartinOf course, the global Covid-19 pandemic did untold damage to AML’s business model. First-quarter sales plunged, with revenues crashing by three-fifths (60%) and pre-tax losses leaping to almost £119m. With net debt nearing £1bn, Stoll’s cash injection (plus an emergency rights issue of new shares) boosted AML’s balance sheet by £536m in cash. And yet the Aston Martin share price kept stalling. By 14 May, the price had imploded again, reaching a record low of 27.5p before recovering to close at 30.7p.Then the share price made a comeback, rising high to exceed 80p in early June. Next, it dropped back again, falling to 46p and then zigzagging along before hitting 73p in early August. By 24 September, it had dipped down all the way back down to 46p again. But it made yet another comeback, closing at 80.05p on Wednesday. This may have been a ‘dead cat’ bounce, because the price promptly dived 9.2p (11.5%) by Friday’s close.I’d steer well clear of this stockWhen I look at Aston Martin today, I see beautiful vehicles made by a struggling, perennially loss-making business. Even before Covid-19, Aston Martin struggled to be profitable from one year to the next. The group first went bankrupt in 1925 — just 12 years after its creation — and has been bankrupt seven times in total. And, in a warning for shareholders, Aston Martin’s latest $1.1bn junk bond carried a ‘danger zone’ yearly coupon of 10.5%. Finally, AML faces a painful transition to a low-carbon world with fewer fossil-fuelled cars. That’s why I would steer well clear of Aston Martin shares today. For me, any investment in AML stock would be driven by hope, rather than reality! The Aston Martin share price dropped 12% in two days. Would I buy AML today? Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. See all posts by Cliff D’Arcylast_img read more