The Aston Martin share price has surged 17% on Friday! Why, and what happens next?

Aston Martin Lagonda‘s (LSE:AML) share price has been battered in recent years. It might be James Bond’s favourite carmaker. But for investors, it’s proved to be more of a licence to lose money than a licence to kill.

Aston Martin shares are down 29% over one year, and a jaw-dropping 95% over five. In that time it’s been plagued by a variety of problems, from production issues and weak end markets to repeated cash calls from shareholders.

So what’s this, then? As I type, Aston’s shares are trading 42.78p each. That’s a 17% gain today (9 October). What on earth’s going on?

Talking technical

The answer, it turns out, lies in Aston Martin’s share price chart. More specifically, the motor maker has hit key technical levels that have triggered a flurry of buying activity.

The shares have in recent days crossed above their key 50-day moving average (DMA), as shown by the green line on the above chart.

Crossing above the 50-day DMA can act as a powerful share price catalyst. It can force a tidal wave of algorithmic buying of a company’s shares by computerised trading systems, which then panics short sellers (investors who bet that a stock will fall) into buying shares to limit their losses.

This in turn can prompt ‘momentum traders’ to pile in, exacerbating the upward swing. And hey presto: you see the kind of massive surge that Aston shares have experienced today.

Can the share price keep rising?

The next big step for the share price will be clearing the 200 DMA, indicated by the red line in the above chart. At 43.91p, that’s a stone’s throw away from current levels.

Aston could meet some serious resistance if it gets near that 200 DMA. However, the charts suggest a successful breakout could lead to anywhere from 48p to the 52-week high of 68p within the next three to 12 months.

So… are Aston shares a Buy?

Here’s what I’m doing

Though the technical picture looks good for Aston Martin, the fundamental picture tells a very different story. And it’s this that matters most over the long run.

There’s no denying the brilliant brand power the British motor-maker enjoys, bolstered by its association with the world’s most famous spy, and more recently by its entry into Formula 1. It also helps that, to many motoring experts at least, Aston is currently making the best cars in its history.

But you can love a company and its products and still consider it a poor potential investment. This is where I stand with Aston Martin’s shares. Revenues have accelerated (up 38% in H1) as production of special editions improved. But can this continue as key US and Chinese markets remain weak and its competitors ramp up? I’m not convinced.

At the same time, spiralling operating and debt servicing costs are threatening any hopes it has to stop making losses. US tariffs are adding further pressure. And then there’s the firm’s net debt itself to consider: at £1.5bn, this is far too high for my liking.

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Though Aston Martin’s share price is rising strongly, I’d still rather consider other investment opportunities today, like the top growth stock discussed in the free wealth report below.

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Royston Wild does not hold any positions in the companies mentioned.