Despite its eminent reputation, Aston Martin‘S (LSE: AML) shares are trading for pennies apiece.

For some people, this may qualify as a penny stock. However, with a market capitalization of £641m, it fails to meet one common criteria for this name. Penny stocks usually sell for pennies, but they also have a market capitalization of less than £100 million.

Apparently, on this basis, Aston Martin remains well outside the penny stock territory – for now.

But this is a percentage that has dropped by 45% in the last year alone.

Could this end up as a penny stock?

Terrible destruction of values

This would require a further decline in the share price of approximately 84%.

Such a collapse sounds – and would be – dramatic.

But just as some petrolheads have a penchant for destroying the road, the Aston Martin performed terribly. It’s down 92% in the last five years.

Of course, the rearview mirror doesn’t tell you what awaits you on the road. However, I think in this case it could give you some useful tips – and the destination could be penny stocks.

The decline in share prices occurred for several reasons. One is that Aston Martin has burned through immense amounts of cash. This continues to happen, which could cause the price to drop further.

Another reason is that the company has not proven its business model. It continues to lose money at an operational level. The situation is made worse by its balance sheet, which had net debt of £1.4 billion at the end of the first half of last year.

A website that consumes money. To lend a hand, the company repeatedly issued recent shares, diluting existing shareholders in the process. I see a risk that this will happen again in the future.

Lots of strengths – so what’s the point?

But there’s a puzzle here.

Many penny stocks also have unproven business models.

But they may also lack many other things, such as brand awareness or commercial scale. Aston Martin has these things in abundance. It has an iconic brand, a very sturdy customer base and stimulating automotive technology, meaning you’ll know an Aston when you see one.

So why is it depreciating so much that it could potentially end up as a penny stock?

Having great assets is one thing. But you have to figure out what to do with them.

Aston Martin has been trying to do this for years, but it still spills red ink like no one else.

The first half operating loss alone was £135 million. Over time, shareholders increasingly lost faith in the attractive financial potential of the company.

Could this change?

I believe it could.

After all, it is a company with a long tradition that generates multi-million-dollar revenues every week. It has advantages that no other car manufacturer has. That and its customer base give it considerable pricing power.

If it can sell more cars, the company should also benefit from greater economies of scale.

But when I think about things could change, it will require catalysts. The company had huge potential for years, but failed to capitalize on it.

Until there are concrete signs that its business model is generating free cash flow, let alone profits, I won’t invest.