Yahoo Finance Aston Martin owner on why new models, F1 allure will boost British luxury automaker
Billionaire Lawrence Stroll says Aston Martin's stock is 'hugely undervalued.' The question is whether the automaker's turnaround strategy makes it a winner for investors.
Billionaire Lawrence Stroll put his money where his mouth is and believes others should do the same with his latest endeavor.
As majority owner and executive chairman of Aston Martin (AML.L) since 2020, Stroll believes better times are ahead for the British luxury automaker and its eponymous Formula 1 race team.
“I think our shares are hugely undervalued,” the Canadian said from the Aston Martin Q lounge in Manhattan earlier this week, and he insisted that Aston is a long-term investment for him.
“I don't plan on selling for a very, very long time. I think I have the perfect storm with this incredible 111-year-old British iconic institution, now building the greatest range and product in the luxury performance automotive sector, with what will be the greatest Formula 1 team.”
Stroll and Aston Martin are projecting positive cash flow by the end of 2024 as well. But Aston shareholders have had quite a bumpy ride this year, with the stock down over 35%.
Stroll believes the company’s underperformance is in the past, and he claims to have warned investors that the early part of 2024 was still a transitional period for the brand. Stroll said delivery volumes were down 26% year over year in Q1 because the company deliberately did not sell some of its older models in order to get newer product into showrooms, with vehicles like the all-new Vantage sports car, DB12 grand tourer, and DBX707 refresh arriving soon.
“We're finally getting to what I said we’d do four years ago — no one listened to me then, but I said it will take four years. We're at that four-year point of inflection of cash flow positivity.”
Last year wasn’t exactly a walk in the park. Aston had to raise money on a number of occasions — and now counts Saudi Arabia’s PIF, China’s Geely, and Lucid as new shareholders. Stroll, who made his billions in fashion and textiles, reiterated, however, that he isn’t interested in bringing more partners at this time.
Stroll believes Aston is set up for success, with new vehicles and updated engines, designs, and even software created in-house that made developing the cars take longer. Stroll said the all-new Vantage has around 400-500 preorders for the $191,000 car.
Production of Aston’s upcoming Valhalla plug-in hybrid supercar is ramping up as well, but its EV ambitions are getting pushed back, with its first EV car arriving in 2026, as opposed to 2025. Stroll said that while the EV delay was “solely due to the lack of customer demand,” a surprise was seeing growing demand for hybrids, even at the luxury level. Beyond Valhalla, Aston’s hybrid ambitions will include another sports car and an SUV, Stroll said.
Then there's Formula 1. The global racing series has been “on fire” according to Stroll, with 2.3 billion viewers watching across 24 races that took place in locales like Singapore, Las Vegas, and Monaco this past weekend.
Liberty Media (FWONK), Formula 1’s holding company, reported revenue jumped to $553 million from $381 million in Q1, with operating income nearly quadrupling to $136 million from $35 million from a year ago.
Since relaunching the Aston Martin brand in F1 in 2021, there has been no looking back for Aston or Stroll either.
“Formula 1 has been transformative to the company. It's brought us a much younger customer; it's brought customers that didn't even know what Aston Martin was,” Stroll said.
“Formula 1, the actual business is on fire, particularly in this country — huge growth. Aston Martin as a business is on fire because of Formula 1, [and] because of all the new products that we're launching.”
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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