Why Aston Martin Shares Fell 17% Despite Higher Q3 Revenues

Key points:
Aston Martin shares fell 17% despite reporting higher Q3 revenues.
The company’s losses ballooned due to negative FX headwinds.
However, the firm’s prospects remain incredibly bullish.

The Aston Martin Lagonda Global Holdings PLC (LON: AML) share price fell 17% despite reporting that its Q3 revenues surged by 33% to £316 million, driven by higher average selling prices (ASP) of £189,000 compared to Q3 2021’s £148,000 ASP.

The high prices paid by customers helped offset the lower wholesale unit sales, which fell 4% to 4,060 units for the nine months to 30 September 2022, versus the 4,250 units sold at wholesale prices in a similar period last year.

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While the higher revenues were impressive, Aston Martin shares fell after the ultra-luxury car manufacturer revealed that it had made an operating loss of £148 million, including a £71 million annualised increase in depreciation and amortisation costs.

Aston Martin’s pretax losses rose to £511 million, driven primarily by a £245 million negative non-cash FX reassessment of its US dollar-denominated debt. The loss was fueled by the British pound’s decline against the dollar.

Investors were unhappy to see the significant negative impact of the pound’s weakness on the company’s profits, which is expected given that it is a UK-based firm that prices most of its products in British pounds instead of US dollars.

The ultra-luxury car manufacturer’s capital expenditures rose to £213 million as it worked on new sports vehicle models to be produced starting next year. The company also spent £106 million as part of its working capital outflows bringing its total cash outflows to £336 million.

Aston Martin noted that due to temporary supply chain and logistics interruptions, it still needed to finish about 400 cars by the end of September, which were awaiting final parts and will be delivered in Q4.

The company’s prospects are still promising as retail demand for its cars outpaces wholesale demand. With the company investing in its production capacity, it is much closer to meeting its 10,000 wholesale unit sales goal by 2024.

The company’s new vehicles continued to sell out shortly after launch, including its New V12 Vantage Roadster, New V12 Vantage Coupe and its Ultra-exclusive DBR22, all sold out before they could begin production.

*This is not investment advice.

Aston Martin share price.