By Stellantis has reported a 19.8% YoY decline in US sales, just two days after the company revised its annual guidance.
The stock has taken the news rather well after declining as much as 15% at the start of the week.
This is causing many to speculate that the worst might already be priced in, making the stock an attractive buy at current levels.
The company’s total sales came in at 305,294 vehicles for the third quarter.
The figure also marks an 11.5% decrease from the previous quarter.
The decline of 19.8% didn’t cause much negativity in the market, partly because the company was already forecasted to show a 21% drop in sales.
This makes Stellantis the worst-performing carmaker in the US this quarter.
The company’s sales went down across all its units except Fiat. Dodge and Chrysler sales were down by more than 40%!
What has caused the carnage?
Stellantis’ CEO Carlos Tavares, in an investor event in June this year, blamed the company’s problems on multiple factors.
A growing inventory and manufacturing issues at some of its facilities have kept the company busy with its internal problems.
A slowdown in auto sales has further worsened the problems.
The company’s problems are also due to a shift to EVs, with the company consistently facing declining sales since 2018.
CEO Tavares believes a focus on profitability instead of market share is the need of the hour, something that hasn’t been well received by the United Auto Workers union, which is threatening a strike to add to the company’s woes.
Stellantis stock: is the worst priced in?
Even though this week has been one of the worst for the company in its recent history, the last good news was in July when the government announced $344 million to convert its Belvidere plant into an EV manufacturing facility.
Carlos Tavares is only at the helm of the company for about two more years. He’s overseeing 14 different brands for the company, with almost all of them struggling. To make matters worse, the company’s board said a week ago that it was considering potential replacements.
In short, Stellantis right now is a company with too many products, none of them doing well, and a management that isn’t even sure if it will be there in the next quarter.
Its employees are disgruntled, with many complaining the company hasn’t kept up with the promises made after the UAW strikes last October. Another strike is on the horizon.
With so much negativity surrounding the stock, the price seems to have dipped too far. The company currently trades at a PE ratio of just under 3. It gives a dividend yield of 12%, with a balance sheet that looks solid.
Yes, there may be some pain as the company weathers the storm. But if ever there was a time to bet against the crowd, it is now. Once the company deals with the UAW issues, accelerates tough cost-cutting measures, and launches newer Jeep models, it can reward investors in the medium term.
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