“Aston Martin Lagonda Global Holdings PLC (LON:AML) (OTCMKTS:ARGGY) has emerged as a chip crisis survivor, revving up sales of its new luxury SUV. Wealthy buyers want the luxury tag but with a big dose of utility, and the DBX now seems to be the weapon firing Aston Martin towards profitability.
Q1 2021 hedge fund letters, conferences and more
DBX Helps Aston Martin Win New Customers
Focusing production on the model was a shrewd move, as it has helped the car maker win new customers, particularly in the lucrative Chinese market. That helped the car maker narrow its losses significantly to £42.2m from £110.1m a year ago with revenues of £224.4 million, better than forecasts.
The semi-conductor chip crisis isn’t expected to ease any time soon, with huge demand from other car makers and other electronic manufacturers, as the digital shift accelerates and demand for cars revs back up. Even so Aston Martin is still maintaining its forecast that volumes will come in at 6,000 vehicles for the full year, with the expectation that will ramp up to 10,000 cars by 2024/25. By then, the company is forecasting that revenue will hit £2 billion, which would mark a three point turn for the company which had been burning through cash and has seen its share price go into reverse, since its IPO launch in 2018.
Investors have given the results a cautious welcome with shares rising by just over 2% in London. Aston Martin appears to be on the road to health, but a lot is likely to hinge on the reception of the new plug in hybrid DBX which is due to go on sale in 2023. With competition heating up in the e-car market, just how well Aston Martin adapts to the revolution will be the key to its success."
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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