Is the crash of Aston Martin share price a buying opportunity?

Aston Martin (LON: AML) share price continued its downward trend as concerns about the company’s future continued. The stock slipped by more than 4%, which is close to its record low of 129.65p, which is about 96% below its all-time high.

No love for Aston Martin

The luxury car market has continued doing well despite the downturn in global assets like stocks and automobiles. As a result, luxury car companies have done relatively well in 2022. 

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For example, while Ferrari shares have slumped by 30% this year, companies like General Motors and Ford have done much worse. Volkswagen Group is considering taking Porsche public in a deal that will value the company at over $70 billion.

Aston Martin, on the other hand, is not doing well as supply bottlenecks remain. Its stock has crashed by more than 75% this year and is about 96% below its all-time high. The company’s Formula 1 team has also struggled in the field and is currently in position 9 out of 10 in the constructor’s championship.

Still, demand for Aston Martin vehicles has remained strong. For example, its GT/Sports cars have been sold out into 2023. DBX orders have risen by more than 40% year-on-year. V12 Vantage has been fully sold out. As such, Aston Martin is not having a demand issue.

Instead, the main challenge is that supply constraint and tight financial conditions. In the first half of the year, the company’s total volumes dropped by 8% due to supply issues. As a result, the company recorded a loss before tax of 90 million pounds.

Aston Martin has partially solved its balance sheet challenges by raising cash from its investors and attracting Saudi Arabia’s Public Investment Fund as an investor. Therefore, the recovery of Aston Martin share price will depend on how it handles its supply chain issues.

Aston Martin share price forecast

aston martin share price

The daily chart shows that the AML share price has been in a strong bearish trend in the past few months. This drop saw the stock tumble to a low of 132.35p, which was the lowest level on July 14. The stock has crashed below all moving averages while the Relative Strength Index (RSI) has dropped below the neutral point at 50.

Therefore, the shares will likely continue falling as sellers target the YTD low of 132.3. A drop below this support will mean that bears have prevailed and open the possibility of the stock falling to about 120p.

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Source: https://invezz.com/news/2022/09/23/is-the-crash-of-aston-martin-share-price-a-buying-opportunity/