Aston Martin shares down 5% on results - and 25% in two weeks

Aston Martin shares ran up in the last few weeks in the hope that the imminent results were going to show that problems were behind them. This isn't how it has worked out, AML is down 5% today to create a 25% fall in the past two weeks.

Aston Martin (LON: AML) has long been a triumph of hope over reality. The car business - not this corporate form, AML - has been bust 7 times already after all. It's a great brand, has value as that, but the actual business of making cars under that brand hasn't been a happy time for capital owners over the past century or so.

The latest attempt to get Aston Martin back on the road hasn't run smoothly either. Ever since Lawrence Stoll brought it back to market at a now near unbelievable £4 billion valuation it's been downhill - with the occasional unsustained leap upward - since then.

Collected

The latest hit is the annual accounts which have just dropped (full report here). The problem is that all of the numbers are moving in the right direction but not, perhaps, as much as people would like. Also, not as much as people were expecting. After all, stock market prices are determined by what believe is happening - change the belief and you change the price.

Annual volumes are up, revenue is up, average sales price is up (more deliveries of the Valkyrie for example) and losses are up. That losses are up when all of the other numbers are looking better is the base problem at Aston Martin.

What's really true here is that the capital structure doesn't suit. This is also a problem that it's rather difficult to do anything about. There've already been capital injections to try to remedy the situation and given the enterp[rise value - or market capitalization - it's difficult to see how more equity could be brought in without excessive dilution of current shareholders.

This makes Aston Martin dependent upon expensive debt financing. Which is what is keeping the company in greater losses even as sales and adjusted EBITDA increase. That capital base just isn't supporting the company leaving the interest bill too high.

As we say, it's difficult to see a way out of this. Lovely, lovely, cars but as a business not so much.