Will the 65p Aston Martin share price ever go back up to £19?

first_img “This Stock Could Be Like Buying Amazon in 1997” G A Chester 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. 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. Enter Your Email Address G A Chester | Saturday, 14th November, 2020 | More on: AML I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Image source: Aston Martin center_img Our 6 ‘Best Buys Now’ Shares 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. Simply click below to discover how you can take advantage of this. Aston Martin (LSE: AML) was floated on the stock market in October 2018. The shares were priced at £19 in the initial public offering (IPO). Today, little more than two years later, they’re trading at 65p. Will the Aston Martin share price ever go back up to £19? Heck, even £1.90 would triple your money!British style and derring-doWhen the company announced its intention to float, it created quite a stir. It would be the first British carmaker to IPO in more than three decades. And what a carmaker! A glamorous century-old name. From chaps haring round the iconic banked bends of Brooklands race track to James Bond’s long association with the marque, we’re talking a heritage of quintessential British style and derring-do.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…At the top end of the initial indicative IPO price range of between £17.50 and £22.50 a share, Aston Martin would have been valued at £5.1bn and had a place in the elite FTSE 100 index. What could be more fitting? And who wouldn’t be proud to own a few shares in the illustrious name?Hang on HenryPutting aside the romance, the investment case was somewhat less compelling. For one thing, management’s growth targets looked on the aggressive side. For another, the balance sheet and liquidity didn’t seem great for a company with a backstory of historical losses, poor free cash flow, and seven bankruptcies.The IPO allowed some existing investors an exit, or partial exit, but raised no new cash for the company. The balance sheet in the prospectus showed debt of £887m versus cash of £71m. The latter looked a bit skimpy for management’s ambitious growth plans.Finally, there was the question of valuation. Even though the £19 IPO price was at the lower end of the initial indicative range, and the shares fell further when they began trading, Aston Martin was still on a premium rating relative to Ferrari — a company with superior profitability and a stronger balance sheet.The collapse of the Aston Martin share priceIn an article a little over a year after the IPO, I suggested dumping Aston Martin shares at a price of 557p.The company was not selling as many cars as management expected, cash generation was poor, and net debt/EBITDA had reached an eye-watering 5.5 times. As such, an equity fundraising with significant dilution for shareholders looked very much on the cards.Can the Aston Martin share price return to £19?Aston Martin had 228m shares in issue in 2018. Today, there are 1.82bn. At £19 a share, its market capitalisation would be £35bn. It would rank at number 11 in the FTSE 100. In short, there’s not a cat in hell’s chance the Aston Martin share price will ever return to £19. And with considerable further dilution in the pipeline, I’m not even sure £1.90 is a realistic target.David Brown, owner of the company through the legendary 1948–1967 ‘DB’ series of cars, once described Aston Martin as an “expensive hobby”. Will it be the same for billionaire Lawrence Stroll, who led the consortium that rescued the company earlier this year?I don’t know. But I do know I can’t afford to treat any investment as an expensive hobby. As such, I’m avoiding the stock, and leaving it to folk who can spare big money to pursue their passions! Will the 65p Aston Martin share price ever go back up to £19? See all posts by G A Chesterlast_img

Leave a Reply

Your email address will not be published. Required fields are marked *