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Aston Martin shares surge 12% as Chinese auto giant invests $295m

Aston Martin shares surge 12% as Chinese auto giant invests $295m

After a challenging 2022, renowned automotive giant Aston Martin (LSE: AML) has so far exhibited an exceptional stock performance in 2023, fueled by strong quarterly earnings, ambitious sales targets, and rising revenues. But things just got even better.  

Aston Martin’s shares rose sharply on Thursday, May 18, after the British automaker announced a 234 million pound ($295m) investment by the Chinese car manufacturer Geely. The move will make Geely the third-largest stakeholder in Aston Martin.

Under the terms of the deal, Geely will purchase around 42 million ordinary shares from Yew Tree, an investment consortium led by Canadian billionaire businessman Lawrence Stroll. Geely will pay 335 pence per share and subscribe for an additional 28 million shares at the same price. Yew Tree is Aston Martin’s biggest shareholder.

“They offer us a deep understanding of the key strategic growth market that China represents, as well as the opportunity to access their range of technologies and components.”

– Lawrence Stroll said in a statement.

The investment will give Geely a 17% stake in the Gaydon, UK-based carmaker, and a seat on its board of directors. 

Stock price analysis

The announcement accounted for the latest stock jump for AML, which was already up significantly this year due to a mix of factors, including its improved profitability guidance. The positive forecast gave its investors a much-needed boost of confidence after reporting significant 2022 pretax losses on the back of a weakening British pound.

At press time, AML was changing hands at 259.4 pounds, up 11.8% on the day after briefly climbing as high as 21% at one point. The stock gained nearly 25% over the past week and more than 61% year-to-date. Compared to its 52-week high, Aston Martin’s shares remain down more than 15%. 

Aston Martin 1-day stock price chart. Source: TradingView

1-year price forecast

Based on 11 analyst ratings over the past three months, Aston Martin’s stock is rated as ‘neutral’ on TradingView. Specifically, 2 experts think that AML is a ‘buy,’ while 6 are advising a ‘hold.’ At the same time, 1 analyst rated the carmaker’s shares as a ‘sell’ and 2 as a ‘strong sell.’

1-year price forecast for AML. Source: TradingView

Further, the 11 financial experts also offered their 1-year price forecasts for AML, with the average price target standing at 220.2 pounds. This indicates a possible downside of 16.3% from the stock’s current levels. 

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