Buy or Avoid?
Aston Martin – a 107-years old iconic luxury British sports car brand has recently dropped from IP of 18 Pounds to almost a 50 Pence. It is on the brink of bankruptcy due to a variety of reasons that we are going to discuss in this piece.
Currently, Aston Martin is an extremely high-risk stock, even higher risk than Carnival, Barclays, AIG, or easyJet. But there is a silver lining too – the board and CEO have been changed and the new guys are determined to revive Aston Martin to its former glory.
So why did Aston Martin stocks go downhill? Andy Palmer, as the CEO of the company, has not been doing a great job recently. All the things he promised to people on the media were never really seen. Investors kept pumping their hard-earned cash into the company but the Aston Martin could not produce anything significant. All the cars that were promised were delayed i.e, the delay in their highly anticipated SUV. As a result, people were disappointed and the sales plummeted.
Moreover, the increment in bad debts and the lack of innovation — like environment-friendly electric cars manufactured by Tesla, Nikola, and Neos — put the final nail in the coffin of Aston Martin.
Also, the pandemic — COVID19, has struck huge blows to Aston Martin stock. For example, there haven’t been any new James Bond movies for the last few years. It used to be a super-big advertisement for Aston Martin where they used to show off their latest cars. So, that too didn’t bode well for Aston Martin.
Is there hope for Aston Martin stock and should you think to buy Aston martin stocks? Recently, a Canadian billionaire named Lawrence Stroll has pumped 182 million dollars into Aston Martin buying 25% shares of the company. He also roped in Toto Wolff who has put in 37 million buying 5% of non-votable shares of the company. These guys know their stuff really well. They have brought in the new CEO — Tobias Moers who formerly worked at Mercedes and is supposedly known as the king of Mercedes. These three gentlemen are rearranging the flow, the way the things used to be at Aston Martin. They are taking strong measures to bring Aston Martin back to its feet by cost-cutting and bringing in new technology.
So with the change in leadership, cost-cutting, and innovation, Aston Martin can revive. Again, as we discussed before, it is still a huge risk; a high-risk-high-reward situation. You can lose all your money if it goes bankrupt for the 8th time. Conversely, looking at the bright side, Aston Martin stocks can sky-rocket if the fantastic-three become successful in streamlining the financials of Aston Martin stock.
To conclude, if you are thinking to add Aston Martin stock to your portfolio, you should take into consideration its high-risk factor. If you have a diverse portfolio but it does not have the luxury, go for it but, the wise thing should be to keep it under 10% of the overall value of your portfolio.
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