Aston Martin Lagonda (GB:AML) started a rights issue to raise £575.8 million to reduce debt and produce new electric vehicles, the final part of a total of £653.8 million of fundraising started in July 2022.
Almost 45% of the issue is already committed by the Public Investment Fund of Saudi Arabia, the Yew Tree Consortium, and Mercedes-Benz AG (FRA:MBG).
With the funds raised, the company aims to reduce its debt pile and strengthen its balance sheet. It will also use the funds to expand its operations in the electric segments and launch new models such as Valhalla, to compete more effectively in the EV segment.
The issue comprises around 560 million shares at 103p per share. The price carries a discount of 79% on the last week’s closing price on Friday.
Shareholders weren’t happy with the discounted price. The stock fell by almost 15% and was among the biggest fallers on Monday, although it recovered and gained around 7.5% on Tuesday.
Overall, share prices are struggling since its IPO in 2018 and have been trading down by 78% in the last year.
Russ Mould, investment director at AJ Bell, commented,” The car manufacturer has been a flop since joining the stock market, and one has to wonder if it would be better off as a privately-owned company.”
“This might simply be Aston Martin finding another piece of frayed rope to keep it afloat and avoid sinking completely into quicksand. The key question is for how long the rope will stay intact before the company needs help again.”
Aston Martin stock forecast
According to TipRanks’ analyst consensus, Aston Martin stock has a Hold rating, based on four Hold and one Sell recommendations.
The AML price target is 804p, which represents an 85.5% upside to the current price level. The price target has a low and a high forecast of 400p and 1,430p, respectively.
Aston Martin is trying to hit some mid-term goals with the extra funds raised, and the investors remain worried about the long-term health of the company. Analysts also believe it could only be a matter of time before the company will need another helping hand.