Aston Martin share price collapses as more cash needed to tackle Covid-19 ‘uncertainty’
The luxury carmaker saw its share price fall 68% in early morning trading after admitting that it will likely need more cash despite only recently receiving a bailout by billionaire Lawrence Stroll.
Aston Martin Lagonda saw its share price fall 68% in early morning trading after admitting that it will likely need more cash despite only recently receiving a bailout by billionaire Lawrence Stroll.
The luxury carmaker told investors that it may need to access high-interest notes, even after being given a £536 million cash injection by a group led by Stroll.
The news sent shares plummeting, with the stock trading at 110p a share as of 13:00 (GMT) on Wednesday. Aston Martin kicked off the year trading at 547p, with the stock losing close to 80% of its value year-to-date.
‘I, and my co-investors in the consortium, continue to believe passionately in the future of Aston Martin Lagonda,’ Stroll said in a statement. ‘This is a very significant capital raise of £536m - due to be made by my consortium and other shareholders at a very challenging time.’
Stroll had hoped that the capital raise he and his co-investors provided would give Aston Martin the ‘necessary stability to reset the business for its long-term future’, but it appears the carmaker remains in a precarious position.
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Covid-19 has created ‘increased and unquantifiable uncertainty’
Aston Martin admitted that it doesn’t have enough working capital according to the European Securities and Markets Authority rules, because the Covid-19 pandemic has put ‘increased and unquantifiable uncertainty’ on the business.
In mid-March, the company told investors how the virus had significantly impacted demand across all markets, particularly China, with the pandemic expected to hurt its financial performance in 2020.
In response, Aston Martin temporarily suspended production at its UK manufacturing facilities until 20 April and is working closely with suppliers and business partners to have production meet demand once the suspension is over.
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