Stellantis rises and clears declines since the Tavares shock, but uncertainties over the future remain

(Il Sole 24 Ore Radiocor) - Stellantis continues its rebound after the thud following the surprise resignation of CEO Carlos Tavares last Sunday. The stock, which had given up 6.3% on Monday after falling nearly 10 points, then recovered ground and added a further +4%, returning above EUR 13, wiping out losses from earlier in the week and indeed returning to the levels of 7 November. Although this is a technical ascent, it is nevertheless a breath of fresh air for the stock, given that since the March highs (above EUR 27) the value has more than halved, while so far in 2024 it has lost 38% (EUR 21.175 at the close on 2 January). Moreover, in recent days, CFO Doug Ostermann, who had confirmed the group's strategy and the payment of dividends, had explained that with the board of directors a discussion will also be initiated on buybacks, which could be interesting precisely in light of the current situation of the stock.

After all, the group's problems are not solved: Citi analysts point out that the fourth quarter results will be crucial in understanding the challenges that await the company, while the issue of declining volumes (uncertain whether it will be able to regain market share), the difficult transition to electric and margins under pressure remains. "Lower prices, adjustments in the model portfolio and reductions in average revenue per unit suggest that operating margins could remain lower than the extraordinary levels of 2022/2023," says Citi.

And then there is the open front with the government, with various members of the majority and opposition clamouring for chairman John Elkann, who has personally taken over the reins of the group until the next CEO is chosen (the name is expected in the first half of 2025), to go and explain in Parliament what he sees in the future of Stellantis, especially as regards production and investment in Italy. For the moment Elkann does not seem intent on making this move, at least not before thetable called at Mimit for 17 December. Representing the company will be Jean-Philippe Imparato, Elkann's trusted man and head of Enlarged Europe in the new interim executive committee appointed after Tavares' exit. Imparato will also see the unions in Turin on 12 December.

Besides all this, the other open front is at the European level, with the new emission regulations coming into force next year and the endothermic engine stop scheduled for 2035. Tavares has always taken a clear stance on the subject, explaining that a postponement would be detrimental because the company has invested and is ready for a change of course. It remains to be seen what the new CEO will choose to do, especially as Italy is asking Europe for a review of the rules or, at the very least, a postponement. And, according to media reports, France and Germany are joining Rome's appeal to the European Commission.

"We note a growing debate around the issue of emissions regulation and related targets at 2025, on which we think a revision is unlikely, and 2035, on which we think a revision towards a softer stance is possible," Intermonte analysts explain, pointing out that "a revision of the 2025 targets would be positive for the sector, while Stellantis should have limited risks', given that it is launching new hybrid and electric models at a lower price, the distance from the targets is not excessive and it has the possibility of signing pooling agreements with other carmakers that comply with the standards (as Fca did in 2019 with Tesla).