Aston Martin Is Selling Its F1 Team Stake and Might Go Private
Aston is no longer expecting to make a profit this year. To survive, it might delist from the stock market.
Like many automakers right now, Aston Martin isn't doing well. US tariffs and weakening demand in China have forced the brand to slash its financial outlook for the year. On Thursday, the company announced it would more likely break even by the end of 2025, rather than make a profit. Now, the company is selling its stake in its Formula 1 team. One analyst suggests Aston could even go private to survive.
Aston Martin has signed a binding letter of intent to sell its 4.6-percent ownership stake in the F1 team to an unknown buyer for $146 million. The injection of cash into the road car business should help with day-to-day operations, without much effect on the race team.
While Aston will no longer have a financial stake in the F1 outfit, the team will still be known as the Aston Martin Aramco Formula One Team thanks to a long-term commercial agreement between the two entities. If you follow F1 closely, you'll know the team previously used the name Racing Point before its rebrand in 2021. Before that, it was known as Force India.
At the same time as this divestment, Yaw Tree Investments, the Lawrence Stroll-led investment consortium that owns a controlling stake in Aston Martin, is set to increase its ownership from 27.67 percent to 33 percent, likely through another influx of cash. Combined, the two cash injections should mean uninterrupted operations through the end of the year.
Could Aston Martin Delist From the Stock Market?
One analyst believes Aston Martin could go private to further bolster its financials.
"Going private is being considered as a potential path forward," says Orwa Mohamad, an analyst at Third Bridge interviewed by CityAM. "Our experts say simplifying the ownership structure could improve agility, attract long-term partners, and reduce the administrative and financial burdens of public listing."
Aston went public in October 2018, with a stock price of £19 ($25.30), valuing the company at $5.76 billion. Right now, shares are trading at just 71 pence ($0.94), for a valuation of $1.01 billion, according to Hagerty.
"Internally, Aston Martin is taking steps to mitigate costs, with a particular emphasis on bill of materials optimisation," says Mohamad. "However, cost-cutting measures take time to filter through, and gross margin recovery is not expected until 2027 or later."
The company has one strong advantage in these uncertain times: Wealthy buyers, who aren't nearly as affected by economic swings as the average car buyer.
"Despite these challenges, Aston Martin’s client base offers some insulation," Mohamad says. "Buyers in the ultra-luxury segment tend to be less sensitive to inflation and economic cycles, giving the company more pricing flexibility."
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