The Aston Martin Lagonda (LSE:AML) share price is down by over 80% in the past year. Most of this downward trajectory happened in 2022 alone since shares have collapsed by 72% since the year started.

This business was admitted to the London Stock Exchange in October 2018. Since its admission, Aston Martin shares have lost over 96% of their market value. And the recent half-year results don’t seem to have helped matters at all.

Needless to say, this has been a tough time for its shareholders. And it makes me wonder if this company is facing an existential problem.

Let’s take a closer look at what happened, and discover if this downward momentum will continue or if this is actually a potential buying opportunity to try and double my money.

Encouraging 2021 results

Though the company has been seeing tough times, its 2021 results were actually quite encouraging.

In the words of the company CEO, Tobias Moers, “2021 was a year of extraordinary progress for Aston Martin. Executing on Project Horizon, we made considerable changes throughout the company and are now operating as an ultra-luxury brand.”

The performance of the British luxury carmaker was very encouraging for me. And in my opinion, it may soon improve investors’ sentiment toward Aston Martin and its share price. The company delivered over 6,000 core wholesale sales.

This is a mouthwatering increase of 82% versus a year ago, which led the group to nearly double its revenue! Meanwhile, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) improved significantly as well as free cash flow.  

Equally interesting for me is that the company introduced cost savings initiatives last year. And has set more manufacturing cost-saving targets for 2022. This could undoubtedly improve Aston Martin’s profitability and, subsequently, its share price over the long term.

Furthermore, the management also brought in new talent to strengthen its commercial, technical and operational team as it transforms into a tech-orientated business.

Aston Martin share price vs 2022 interim results

While 2021 delivered seemingly solid progress, this momentum appears to have fizzled as mixed results start to re-enter the picture.

In its most recent results, Aston Martin’s total wholesale volume was down 8%, while the company reported an operating loss of £89.9m. That loss is 137% greater than a year ago. And it’s led to a 42% increase in net debt, rising from £791.5m to £1,266.4m

On the other hand, overall revenue did improve by 9% in the last six months. And on an adjusted basis, EBITDA rose by a respectable 20%.

Demand continues to drive vehicle sales to the point where its GT/Sports car models are now fully sold out into 2023. Meanwhile, its recently launched DBX model saw a 40% rise in customer orders.

Beyond the financials, there’s also been a shake-up in upper management of this car maker.

• Amedeo Felisa is now the new CEO who used to serve as chief executive at Ferrari.
• Doug Lafferty has taken over the role of Chief Financial Officer.
• There’s also a new Chief Technology Officier and a new Chief People Officer.

Seeing that many role replacements in a relatively short space of time can be quite worrying. But it also signals the group is once again taking action to try and turn itself around.

At the moment, it’s too early to say whether this new management team have what it takes to move the Aston Martin share price back in the right direction for the long term.

Aside from its leadership change, the company entered into a Strategic Cooperation Agreement (SCA) with Mercedes-Benz.

Aston Martin will be integrating Mercedes-Benz technology into its luxury cars, and its partner also invested some cash into Aston Martin, helping to re-enforce the weak balance sheet.

So, what does this all mean for the Aston Martin share price?

What’s next for the Aston Martin share price?

As a potential future shareholder of Aston Martin, I am quite satisfied with the transformation drive of the company. In my opinion, this will create value for investors in the future.

The firm unveiled its DBX707 luxury SUV on 1 February 2022 and was launched to significant customer and media excitement. This release shortly followed the launch of the new Aston Martin Valkyrie hypercar at the end of last year.

Sadly, the company was unable to start delivery of its DBX707s due to supply chain constraints, with more than 350 DBX707s waiting for missing parts for vehicle completion.

This is undoubtedly a short-term problem. Yet, there remain other challenges to consider before making an investment decision.

Risks to consider

While I like the changes going on in the company, the luxury car space is very competitive. Aside from that, the company added to their already sizable debt in 2021.

While both of these threats could adversely impact the Aston Martin share price, my primary concern is its relatively slow adoption of electric vehicle technology. The company launched a hybrid DBX model in China last year. And plans on delivering its first plug-in hybrid electric vehicle (PHEV) in early 2024, along with a battery-electric vehicle (BEV) in 2025. However, this may be too late, with many competitors already establishing themselves within this space today.

Time to buy?

All things considered, I believe the Aston Martin share price has the potential to double over the long term. But there remains a lot of unknowns surrounding this business.

Supply chain disruptions, a balance sheet with cracks, and a brand new leadership team open the door to a lot of unknown factors. It’s possible that despite its best efforts, this stock fails to deliver the comeback investors are waiting for.

With that in mind, I’m not using to add these shares to my portfolio today. But I am keeping a close eye on the progress being made.

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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.