The Aston Martin share dropped to a new low as pressure on the British luxury car maker continued to grow in a broader market environment.
The stock fell 21% on Thursday morning to a record low of 371 pence – more than 80% lower than the price of 19 GBP when the company was listed on the London Stock Exchange in October. They were later traded at 406p, still 13% lower on the day.
Based in Garydon, Warwickshire, the automaker downgraded its sales forecasts for 2019 from around 7,250 vehicles to 6,400 vehicles last month. The reason for this is the macroeconomic uncertainty in the United Kingdom and Europe, which are weakening and the risk of an unsaleable Brexit at the end of the year is October.
The weaker sales of Aston Martin in the first half of the year – at a time when a new plant needs to be financed to build an SUV, the DBX – have challenged many investors about whether more money needs to be raised, potentially the value of the stock dilute.
The worsening prospects have intensified the financial pressure. The Moody & # 39; s rating agency downgraded Aston Martin's credit rating in July, making it more expensive for car makers to borrow. Hedge funds have also entered a record level of short bets that will reduce their debt value, the Financial Times reported this week.
Aston Martin posted a loss of nearly £ 80m in the first half of the year and Tobias Wagner, a senior analyst at Moody's, pointed to the lack of revenue growth and the battle for earnings on the downgrade. He said that Moody's still sees Aston Martin's access to cash as appropriate, but the generally weak UK and European environment and the continued need for high spending mean that it could come under pressure.
"Significant negative free cash flow for 2019 and 2020 means that the liquidity profile is weakening," said Wagner before the fall.
A stock analyst studying the company said the downtrend on Aston Martin stocks was likely compounded by the generally negative sentiment in global equity markets, meaning that few buyers were available for stock.
The FTSE 100, which Aston Martin does not own, hit a five-month low on Thursday. Markets around the world have been shaken by fears of a recession following the reversal of yield curves for US and UK government bonds. This is a sign that investors believe a contraction is imminent.
Aston Martin declined to comment.