There have been quite a few flops on the UK stock market over the years, but perhaps none as high profile as Aston Martin Lagonda (LSE: AML).

The luxury sports carmaker has lost around 95% of its market value since listing in late 2018. It’s the worst-performing FTSE 250 stock over the past five years, and is down 27% this year alone.

However, it’s staged a mini comeback in recent days, racing 23% higher since 30 May. What’s causing this and could it be the start of a much bigger turnaround? Let’s take a closer look.

A poor first quarter

This sudden revival may seem a bit strange on the face of it. After all, in its first quarter results for the three months ended 31 March, the firm missed market expectations on just about everything.

Revenue fell 10% year on year to £267.7m, driven by a 26% fall in wholesale volumes to 945. The pre-tax loss almost doubled to £139m, significantly more than the £93m analysts had pencilled in.

Meanwhile, net debt rose from £868m to £1.04bn. This has long been the company’s Achilles heel and remains a key risk.

One quantum of solace is that Aston is launching four new models this year and reckons this will drive “significant growth” in the second half (H2).

Consequently, it kept its full-year guidance for enhanced profitability and EBITDA, driven by high single-digit wholesale volume growth. And CFO Doug Lafferty expects H2 to be free cash flow positive.

However, management sees the current second quarter being similar to the first, calling this “an expected period of transition” as it halts production of old models in preparation for the refreshed line-up.

On the move?

Needless to say, there’s not much there to spark a sudden rally in the share price. So what gives? Well, it seems less to do with operations and more likely related to an article from The Times on 31 May.

This reported that executive chairman Lawrence Stroll is open to a potential New York listing. He said investors still haven’t moved on from the “colossal failure” of the original IPO under previous management.

Since this report, the stock’s surged 17.5%. So this appears to be a speculative rally based on the possibility of Aston Martin dropping its London listing in favour of New York.

However, it should be noted that Stroll said there are no immediate plans for this. Personally, I’m skeptical that a loss-making firm saddled with lots of debt would maintain a higher valuation across the pond.

A big turnaround?

That said, Aston Martin stock stands out to me as having plenty of potential for a huge comeback. I mean, we’ve already seen a dress rehearsal for what this could look like. Between late 2022 and mid-2023, the stock rose nearly 300% as Aston raised money from existing stakeholder Geely and made operational progress.

Then things went into reverse as production issues with the new DB12 model caused it to reduce its volume outlook for 2023.

Looking ahead, if the new cars sell like hotcakes and cash flow improves significantly, we could see a massive share price rebound at some point. However, I’m not confident enough to put my money in the stock yet. I’ll keep watching developments.