Mercedes Benz will increase its stake up to 20% to become one of the major shareholders of Aston Martin
Aston Martin plans to sell 10,000 cars annually, almost twice as many as last year
Aston Martin’s shares initially plummeted by almost 20% before rotating downwards to wipe out all profits
The shares of Aston Martin (LON: AML) are trading around 4% lower on this day as buyers struggled to maintain the gains recorded yesterday morning.
Fundamental analysis: A big deal announced
Daimler’s Mercedes-Benz agreed to increase its stake in Aston Martin to further strengthen the current cooperation between the two automakers. Mercedes Benz will increase its stake up to 20% to become one of the major shareholders of the British car manufacturer.
Under the terms of the agreement, Aston Martin will have some access to Mercedes’ electric and hybrid drive systems. This will allow Aston Martin to advance its plans to produce its own electric vehicles (EVs).
Aston Martin says the agreement will include “a powertrain architecture (for conventional, hybrid and electric vehicles) and a forward-looking electric/electronic architecture for all product launches through 2027”.
The agreement is expected to help Aston Martin achieve its target of selling approximately 10,000 vehicles by 2025, almost twice the 5,862 vehicles sold last year, and generate approximately £2 billion in revenue. The EBITDA target is £500 million The UK car manufacturer sold 5,862 vehicles last year.
“This new expanded agreement gives us access to world-class technologies to support our long-term product expansion plans, including electric and hybrid powertrains, and this partnership underpins our confidence in the future,” said Lawrence Stroll.
“This really is a change of game. We now have the right team, the right partner, the right plan and the right financing to make the company one of the world’s largest luxury car brands”.
Technical analysis: The risk sentiment is pressing
Aston Martin’s shares initially broke out by almost 20% and traded at £0.6460, the highest level since mid-August. However, sellers managed to undo almost all of these gains and the stock closed just 0.92% in the green yesterday.
Aston Martin Daily Chart (TradingView)
The worsening risk sentiment continued to weigh on the AML as yesterday afternoon’s losses increased, pushing stocks to £0.5250 and trading about 4% lower. A closing price below £0.5633 – the 200 DMA – will only add to the downward pressure on buyers.
The price of Aston Martin shares continued to fall today after rotating downwards yesterday afternoon to undo all the gains made possible by a new partnership agreement with German car giant Mercedes Benz.