Fasten your seat belt! Why I think the Aston Martin share price could go downhill from here

first_img Ellen Leung | Thursday, 4th June, 2020 | More on: AML Simply click below to discover how you can take advantage of this. It has been a roller-coaster ride for the Aston Martin Lagonda (LSE: AML) share price. The company has been publicly listed since October 2018 – and the share price has been going down since then. So this is not purely a coronavirus-impacted collapse. And here is why I think its share price could continue to go downhill from here.The Aston Martin share price could plummet without proven leadershipThe departure of CEO Andy Palmer indicates the long-time failing leadership within the company, in my opinion. Even with the incoming CEO Tobias Moers from Mercedes, I don’t see a quick turnaround for a company that is slowly losing its brand appeal. Major shareholder Investindustrial Advisors Ltd also cut its stake in the company by nearly 5% to 14.99%.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…On top of the Covid-19 crisis, the company was already suffering from the effect of the US-China trade war, with demand slumping from wealthy Chinese customers in 2019. The global automotive industry has undergone a tough year.Murky earnings outlookAston Martin last month posted a big first-quarter loss after sales dropped by almost a third due to the impact of the coronavirus outbreak. The company has been experiencing a negative net profit in the last two years. With the ongoing impact of coronavirus and no end in sight, I would not bet on a near-term revenue increase, let alone earnings.Additionally, a healthy balance sheet is more important than ever in this uncertain time. Aston Martin’s debt level has increased by double digits year-over-year, which is very concerning. The cash-strapped company had to raise £536m to increase liquidity to fund its short-term working capital needs. The funding comes from Canadian billionaire Lawrence Stroll, who took a 25% stake in the company. Meanwhile, it is also raising proceeds of £317 million by issuing new shares. This will dilute existing shareholder value, which isn’t exactly great.My verdictThe stock might look very cheap on the surface to some. But when looking closely at its limited revenue growth with slumping global sales, especially in China, I don’t see the company having a very bright future ahead.It is clear that Aston Martin had problems before the Covid-19 crisis, and that’s why its share price was hit so hard amid the pandemic-related sell-off. I think it is fair to say car manufacturers like Aston Martin will take a lot longer to recover, if it recovers at all. Therefore, I will stay away from the stock. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Image source: Getty Images Ellen Leung has no position in any of the shares mentioned in this article. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.center_img “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Fasten your seat belt! Why I think the Aston Martin share price could go downhill from here Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. 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