The British automobile industry is not doing well even as countries like India and China continues to take market share. McLaren, the luxury vehicle manufacturer is running out of money while Aston Martin (LON: AML) share price has collapsed to its lowest point since February 2023 as the company seeks to replace its CEO. The stock has retreated by more than 96% from its all-time high.
Fixing Aston Martin is toughThe main catalyst for the Aston Martin stock price is a recent report that the company is seeking to replace its CEO as the turnaround strategy stalls. According to Bloomberg, Chairman Lawrence Stroll wants to replace Amedeo Felisa who joined the company in 2022 from Ferrari. The new CEO will be the fourth one in four years.
The fact that Aston Martin is considering a new CEO change is a sign that things are not going well internally even as its vehicles see strong demand. Recent results showed that some of its brands like Valkyrie have been sold out while DBS are gaining market share.
What is clear about Aston Martin Lagonda is that the business is not growing as fast as it should. Its total wholesale vehicle sales rose by just 8% in the last quarter to 4,398 while revenue jumped by 21% to 1.03 billion pounds. Its loss before tax stood at 259.3 million pounds and the management does not expect to be profitable soon.
Aston Martin’s woes sharply contrast what is happening in the luxury vehicle industry. In Italy, Ferrari is firing on all cylinders, which has lifted its stock to a record high and made it the eighth biggest automaker in the world.
The challenge for Aston Martin is that it is working on a difficult budget. While the company has reduced its total debt, it remains quite leveraged. Its net debt stands at over 750 million pounds. It has over 544 million pounds in cash and 60 million in revolving credit available.
Aston Martin share price forecast
In a recent article, I cautioned investors against investing in Aston Martin and recommended that they buy Ferrari instead. Those who heeded to this call have done very well as the latter has surged to a record high after publishing strong results.
Looking at the daily chart, we see that the AML share price has continued its freefall this year. And most recently, it crossed the important support at 177.1p, its lowest swing on November 1st. It has also crashed below the 61.8% Fibonacci Retracement level.
The Percentage Price Oscillator (PPO) remains below the neutral point while the price has moved to the oversold point of the Murrey Math Lines. Therefore, the outlook for the stock is still bearish, with the next point to watch being at 150p, the 78.6% retracement point.
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