Why I bought Aston Martin shares because of Formula 1

Aston Martin (LSE:AML) shares have had a hot few years, with prices down more than 90% since their 2018 IPO. The British car company’s stock has failed to meet investors’ high expectations since its launch.

However, that may be about to change, and the luxury carmaker may have its Formula 1 team to thank. This is why the success of the Formula 1 team finally led me to buy shares in Aston Martin.

The pinnacle of motorsport

Formula 1 is considered the pinnacle of world motor sport. Over the years, 171 constructors have competed in Formula 1, and 161 have ceased to exist.

It is understandable that there was skepticism when Lawrence Stroll and his investors bought the Force India team.

In 2021, the team changed to Aston Martin following Stroll’s investment in the British car company. Despite the pedigree of the race given the new name, the team’s results were poor, in seventh place in 2021 and 2022.

Things look bleak for the constructor. However, moves are being made behind the scenes to build future world championship contenders. Stroll poached above the talent of MercedesRed Bull, and Ferrari and invest heavily in team facilities.

The 2023 Aston Martin F1 car is the first to benefit from technical chief Dan Fallows, who was lured away from Red Bull. Still, because the facilities are being built, the goal for the Silverstone outfit to become a top competitor is probably a few years away.

Then, in 2023, Aston Martin unexpectedly became the top performer, leapfrogging the midfield car completely and possibly the second fastest car after two races.

The team has achieved podiums in both races with driver Fernando Alonso. In the previous two years combined, they only celebrated one podium position.

Why this has anything to do with Aston Martin stock

Today, success in Formula 1 is not the same as financial success. Teams often spend as much, or more, than they bring in.

So why am I buying Aston Martin stock?

I believe that the success of the Formula 1 team can be directly attributed to the stewardship of its chairman, Lawrence Stroll.

As chairman, Stroll has made the right investments, brought in the right people, and, this season, achieved the unthinkable to reach the top three teams. Established teams and companies like McLaren and Renault/ Alpine has failed to do that for over a decade.

I believe that the F1 team can be seen as a case study in how a car manufacturer can be turned around. As executive chairman, Stoll oversees the car company. As with racing teams, their leadership can be the key difference between a company’s success and failure.

This is not to say that a new investment in Aston Martin stock is without risk. Financially, Aston Martin doesn’t look like a value stock. It has reported losses for the past three years, even though revenue has doubled over the same period.

I have invested in Aston Martin because I think that if Lawrence Stroll can turn his Formula 1 team into a top contender, he can do the same with the car brand.