Aston Martin shares might slide further after 500 jobs losses amid Covid-19 sales slump
The luxury car maker plans to axe 500 jobs after the coronavirus has impacted demand, leading to a slump in sales and the need to cut back on production of its vehicles.
Aston Martin Lagonda said that it will lay-off 500 workers due to the coronavirus pandemic leading to a slump in sales and, therefore, a need for the company to cut back on production.
The luxury car maker plans are part of a wider restructuring plan that aims to save the company £18 million a year in operating and manufacturing costs, with an additional £10 million reduction in capital expenditure. Aston Martin expects to talk with its employees and trade unions in due course.
Aston Martin is down 2% to 66p per share at the time of publication.
Aston Martin suffers Q1 loss amid Covid-19 crisis
In May, the luxury car maker recorded a significant first-quarter loss due to sales falling by almost a third due to the economic impact of the Covid-19 pandemic.
Its losses were compounded by rising US-China tensions prior to the outbreak, which reduced demand from the Chinese market. Relations between the world’s two largest economies have begun to worsen again, something that could hurt the company’s sales throughout the year.
‘Aston Martin continues to take decisive action in other areas to reduce cost and remove non-critical expenditure from the business at every level including in areas such as contractor numbers, site footprint, marketing and travel costs,’ the company said in a statement.
‘The measures announced today will right-size the organisational structure and bring the cost base into line with reduced sports car production levels, consistent with restoring profitability,’ Aston Martin added.
Aston Martin: technical analysis
The stock continues to come under pressure on Thursday, having already shed almost 90% of its value over the past six months.
In March, Aston Martin shares tried to retrace some of its recent losses but faltered at key resistance just above £2.85, before gapping sharply lower to hit an all-time low in mid-May.
Since then, the stock has recovered modestly, trading in an ascending trendline with a series of higher lows, although it still remains significantly below the key £1 level.
The recent narrowing of the Bollinger bands might suggest that there could be some volatility ahead for the stock, which is currently testing the upper band, according to Victoria Scholar, market analyst and presenter at IG.
‘There appears to be key resistance at the 50-day moving average of 83p. A crossover of price above this level would act as a bullish indication for the stock,’ Scholar said.
‘Then next resistance levels to watch would be the psychological £1 mark and £1.19 where the stock gapped lower in March. Meanwhile on the downside look for support at the 20-day moving average around 45p,’ she added.
How much does it cost to buy UK shares with IG?
There are three ways to ‘buy’ UK shares with IG: spread betting, trading CFDs or buying physical shares. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to £10,000 of Lloyds stock, which is equivalent to 16,000 shares (quoted at 62.5p a share).
Remember, spread bets and CFDs are derivatives, which come with higher risk and reward than investing.
Cost to get exposure to Lloyds stock
Spread betting | CFD trading | Share dealing | |
Action | Buy £160 per point | Buy 16,000 share CFDs | Buy 16,000 shares |
Capital required to open | £2000 | £2000 | £10,000 |
Total fees | £20.88 | £20.88 | £16 |
Ready to start trading shares? Open a live account or practise on a demo.
Note: Amounts do not include overnight funding charges and taxes. Spread bets are not subject to tax. CFDs are free from stamp duty, but subject to capital gains tax. Share dealing is subject to both stamp duty and capital gains tax.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.