Wednesday 24 July 2019 12:04 pm

Aston Martin revenue warning leaves shareholders shaken, not stirred

A week before Aston Martin’s half-year results are due, the James Bond car maker has yet again used its license to kill the share price.

The luxury manufacturer this morning cut its sales expectations to 6,300-6,500 vehicles, down from 7,100 to 7,300 cars.

Read more: Aston Martin shares crash 24 per cent as it slashes revenue prediction

Aston Martin share price plummets

Aston Martin’s glitzy stock market float last year must seem a world away for the company’s board.

This morning’s 24 per cent share price drop pushing stocks to 788p – nearly 60 per cent below its 1,900p Initial Public Offering price back in October.

AJ Bell investment director Russ Mould said: “Floating on the stock market can boost a company’s reputation and provide an opportunity for the public to buy into the story.

“However, it can also expose a company to criticism from investors who are watching every move like a hawk.

“Now it’s gone and done one of the worst things a newly-listed company can do in the first year of being on the stock market, namely issue a revenue warning.”

While 007, the firm’s most famous customer, may have made his name destroying expensive sports cars, even he would surely struggle to match the £2.4bn obliteration in value Aston Martin has suffered since its October float.

‘Challenging external environment’

Aston Martin has struggled in the face of a cooling global car market. The ongoing trade war between the US and China has hit manufacturers across the globe. 

But separate to this, the industry is in the process of slowing down. The Confederation of British Industry this week warned British manufacturing output shrank at the fastest pace since the financial crisis over the last three months.

Aston Martin chief executive Andy Palmer said the firm would have to do something after sales dropped 22 per cent to UK car dealers in the second quarter. Meanwhile in the rest of Europe, the Middle East and Africa it suffered a 28 per cent drop.

But he was not specific about how to tackle the problem. He said: “We are today taking decisive action to manage inventory and the Aston Martin Lagonda brands for the long-term.”

Aston Martin currently supports 850 manufacturing jobs in the UK at its Gaydon plant. But many will fear it becomes the latest car maker with operations in Britain to cut its numbers as it tries to navigate a path through this tricky period.

Investors should feel let down

Neil Wilson, chief analyst at Markets.com, said the revenue warning would provoke the ire of investors who bought up Aston Martin’s stock upon its IPO.

“It’s delivering growth, just not at the speed at which management thought. Shares will come under pressure again,” he warned.

Read more: Aston Martin’s biggest shareholder is set to up stake by £68m

David Madden, an analyst at CMC Markets, added that is was a sign of the severity of Aston Martin’s problems given its incredibly wealthy customer base.

“The super-rich tend to weather economic uncertainty reasonably well, and it is worrying if Aston Martin feel the need to trim their outlook,” he said.

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