(News Bulletin 247) – The action of the automobile group shows the biggest drop in the CAC 40 this Thursday after having already lost 10% on Tuesday. Fears about stocks in the United States and especially in Europe are weighing on the stock.

Stellantis has taken on the appearance of a stock market car in recent months. Strongest increase in the SBF 120 last year (+59%), the action of the manufacturer resulting from the merger between PSA and Fiat Chrysler also performed very well at the start of 2024, with an increase of 24.5% at first quarter, the fifth largest in the SBF 120.

But the dynamic took a big hit over the last two sessions. Stellantis shares lost 3% this Thursday at the start of the afternoon, showing the biggest drop in the CAC 40 after having already dropped more than 10% on Tuesday (the Parisian market was closed on Wednesday due to May 1).

A double-digit fall which was previously unprecedented in the young stock market history of the company born in January 2021. How can this market reversal be explained?

As for this Thursday’s reaction, “it is a continuation of Tuesday’s bad trend, with, in addition, data from the American market in April which shows a continued drift in stocks”, explains a financial intermediary.

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Stocks to improve in the United States

According to data compiled by Jefferies bank, Stellantis saw its market share decline by 2.5 percentage points in April in the United States, and, above all, stocks are at a “worrying” level, argues the bank . Inventories represented 100 days of sales in April, the highest level among the Detroit groups (i.e., Stellantis, General Motors and Ford). Inventories also increased by 9.4% over one month in volume.

“April’s low sales volumes exaggerate the month-over-month increase in days, but the absolute increase in inventory is concerning and does not match the clearance message communicated during the conference call on revenues for the first quarter,” underlines Jefferies.

In the first quarter of 2024, Stellantis reduced its inventories by 66,000 units, according to data released Tuesday morning by the company. But financial director Natalie Knight told analysts that this reduction came primarily from Europe. The manager specified that stocks in the United States were “in a healthy range”, according to her, even if they were “on the upper limit” of this range considered reasonable.

“The group needs to make room for the arrival of new products on the American market, but we don’t have the impression that stocks are really falling. Investors have been looking at this subject for a while. But the problem is that even though they had an eye on the left with this question of stocks, another problem arises on the right with Europe…”, explains the financial intermediary previously cited.

A “live profit warning”

This is in fact the other element or even the main point which triggered the correction of the stock on Tuesday: a “live profit warning” issued by Natalie Knight, during her conference call with analysts, with unappealing comments on the European market.

First of all, the manager indicated that due to the weak start of the year on sales, Stellantis expected a current operating margin rate of around 10% to 11% in the first half compared to 14.4% over the first six month of last year, as well as a cash flow “visibly” lower than that of the same period of 2023.

Oddo BHF evokes “an unexpected reset and an unfortunate first for Stellantis”, which should push the consensus to adjust downward by 10%.

Above all, Natalie Knight made comments considered pessimistic on Europe, emphasizing that this market was “one of the toughest”, where “pricing”, that is to say the pricing environment, was found “under pressure”.

“The fall in the share price was due to these negative comments on the pricing environment in Europe and the indications on margins for the first half of the year,” summarizes Deutsche Bank.

See you on June 13

The German establishment notes that Natalie Knight’s statements, indicating that Europe was therefore a difficult market with already pressures on prices, “contrast with the more positive comments from Volkswagen and Renault on Europe and which noted ‘stable pricing’.

Stellantis will return to the market fairly quickly since an “investor day”, a day dedicated to investors, is planned for June 13 in Michigan.

“Management will now have to redouble its efforts in order to convince of the sustainability of its operational performance and its ability to achieve its 2030 objectives. This will be the main challenge of the Capital Market Day to come on June 13, but the task will be great,” considers Oddo BHF.

The broker emphasizes, however, that the “fundamentals of the group remain solid”. “At this stage, we are still leaning towards the thesis of the accident, whether in substance or form, and expect a rebound in performance from the second (semester) and in 2025,” he concludes.