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Here’s Why Aston Martin Share Price Surged Over 18% Today

Practice Stock Trading
Updated: 28 October 2020

Shares of Aston Martin Lagonda Global Holdings (LON: AML) have traded over 18% higher this morning in London on news that Mercedes Benz will increase its holding “in stages” from 5% to 20%.

The German car giant will increase its holdings as a part of the “strategic technology agreement,” between two companies. In the first phase, Mercedes will increase its stake to 11.8% following a £140 million share issue.

Seven years ago, Aston Martin and Mercedes entered into a partnership to develop engines, with the latter taking a 5% stake in the company. 

“This is a transformational moment for Aston Martin. It is the result of six months of enormous effort to position the company for success to capture the huge and exciting opportunity ahead of us,” said Lawrence Stroll, a Canadian billionaire and executive chairman of Aston Martin, who acquired a majority stake in the British luxury marque. Stroll also controls Racing Point Formula 1 team.

Two days ago, Aston Martin reported a £29 million pre-tax loss for the third quarter. The British carmaker has struggled to stay profitable for decades.

“With this new expanded partnership, we will be able to provide Aston Martin with access to new cutting-edge powertrain and software technologies and components, including next generation hybrid and electric drive systems,” said Wolf-Dieter Kurz, head of product strategy at Mercedes-Benz Cars.

Aston Martin share price rose nearly 19% on a partnership with Mercedes October 2020

Aston Martin share price traded at 64.60p earlier this morning to print a new 2-month high. Shares have now pared back earlier gains to trade at 57.35p, or 5.23% higher.

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