Aston Martin Shares Crash Following Downward Revision Of Annual Delivery Forecast

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by Tyler Durden
Wednesday, Nov 01, 2023 - 01:30 PM

Shares of troubled luxury sports carmaker Aston Martin plunged as much as 20% in London, following the company's downward revision of its yearly vehicle delivery forecast and supply chain snarls impacting the DB12 model for the third quarter.

According to Bloomberg, Aston expects 6,700 deliveries this year, down from the previous forecast of 7,000. There was a noticeable slide in wholesales to China, down 57% in the first nine months of the year, while wholesales increased in the Americas and Europe. 

"The DB12 production ramp-up was temporarily affected as supplier readiness and integration of the new EE platform that supports the fully redeveloped infotainment system was delayed," Aston said in its earnings report on Wednesday. It added these supply chain woes are now fixed but have impacted third-quarter volumes and full-year production capacity. 

Aston is in the midst of a turnaround effort led by Executive Chairman Lawrence Stroll and has completed numerous capital raises with Saudi Arabia's Public Investment Fund and Geely Automobile Holdings Ltd. However, the sports carmaker still sits on a massive debt pile in a period where interest rates are sky-high. 

"It is still sitting on a big pile of debt and continues the painful effort of deleveraging a strained balance sheet. Undoubtedly, progress has been made in fixing some of the problems faced by the business but it all feels a bit too little too late," Russ Mould, investment director at British stockbroker AJ Bell, told CNBC. 

Bell said, "The company is seeing strong demand but, with losses coming in ahead of expectations, there is little reason for the market to give Aston Martin the benefit of the doubt for even the smallest misstep." 

Here's what other Wall Street analysts are saying about Aston's earnings (list courtesy of Bloomberg): 

Jefferies (buy, PT 420p)

  • Analysts Philippe Houchois and Owen Paterson say 3Q numbers came in slightly below consensus on volume and revenue

  • Note FY volume guidance revised down 300 units on DB12 ramp delays

Barclays (overweight, PT 300p)

  • Analysts led by Henning Cosman say DB12 demand and ramp-up issues "don't bode well" 

  • Lower their PT to 300p from 400p reflecting near-term negative earnings revisions and lower target multiples

  • Still, say continue to see an "increasingly plausible trajectory" to a sustainable and attractive business model

Oddo (outperform, PT 460p)

  • Analyst Anthony Dick says the results are rather weak as expected ahead of new generation sports car ramp-up

  • Notes 4Q still expected to make up for the bulk of the FY results

  •  Says finds order book for new DB12 car "rather underwhelming" especially after management's optimism during 2Q results 

Aston Martin's shares have been consistently heading in one direction: downward.

Throughout its 110-year existence, Aston has faced bankruptcy seven times. The first time was in 1924, while the last was in 2007. 

Aston will never be a Ferrari or Lamborghini...