Aston Martin Lagonda (LON: AML) shares have not been doing well with being down 8% this morning and also 30% down over the past week. The Aston results were out the week before that and at least some of this can be thought of as a reaction to having digested that news. Aston Martin shares have perked up at times when they’ve interesting news to release – like their increased hiring at the DBX plant in Wales.
The reason that various little bits and pieces of news move the Aston share price so much is that we’re in the presence of uncertainty here. After all, the actual car company itself has gone bust many a time in the past. Building top-end cars with the latest technology is a difficult market segment to survive in – that’s why near all competitors are owned by the large volume car manufacturers after all. The capital required to create an entirely new platform is simply vast.
Maybe Aston Martin can buck this trend and maybe it can’t. Their whole strategy of building the DBX SUV is to provide that greater volume and thus financial resources so as to be able to continue to compete. But we’re all uncertain about that, w need to see the results. That’s why the share price moves on such seemingly trivial news as hiring 100 workers in Wales.
Or, as might be the case here, Aston is to announce today that it has signed up with Britishvolt for the supply of batteries for its electric vehicles. Normally we would think that “car manufacturer chooses supplier” is of interest to shareholders in the supplier, not the manufacturer. But opinions about Aston Martin are so febrile that evidence that the long term is still being looked at might have a beneficial effect.
There is also the other announcement today, that they’re suspending sales into Russia. But then that is pretty obvious given the other sanctions that are going on. And who wants to be paid in rubles these days, given the likely direction of their value – and no, Russians won’t be allowed to pay in anything else.
On the larger issues, the Aston Share price is likely to be influenced by the announcements of the final accounts for the 2021 year. We’ve had the full-year results and now await the actual accounts. The Valkyrie programme is suffering delays, yes, but that’s a cash flow issue as all vehicles have been sold. The delays are interesting only as a guide to the effectiveness of day-to-day management. The really big thing is how DBX sales go this coming year. That’s the big move into a greater volume market and any news on that will be eagerly examined.
We face uncertainty over Aston Martin so any new news is likely to be price moving.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.