Shares of Stellantis (STLA) are plunging in extended-hours trading after the carmaker slashed its earnings forecast, expecting to burn through more cash than anticipated and citing rising competition from China.
Morning Brief Hosts Seana Smith and Madison Mills report more on the story and dive into some of the headwinds facing the auto industry, from inventory issues to competition from lower-priced Chinese vehicles.
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Melanie Riehl
Video Transcript
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So to shares are plunging here this morning, you’re looking at losses of just about 12.5%.
The car maker slashing its earnings forecast saying it will burn through more cash than expected, citing deteriorating industry trends, rising competition from China.
Now stent is also saying in its profit warning that it expects to finish the year with negative cash flow just to, to sum it up.
It is a tough road ahead here for Stella as we talked about the fact that we are seeing some of these automakers lose a bit of their pricing power given the fact that demand has fallen when you compare it to what we have seen over the last several years.
And and it’s also just joining a long line of automakers that have been lowering their guidance as a result of some of the changing dynamics within the space right now.
And and Mattie, I think one of my big takeaways is what this ultimately means for leadership within install anti because we know pressure has been building now for quite some time, the CEO facing investor pressure VC even pressure from dealers here over slide sales over the fact that maybe their new product line up hasn’t been as innovative.
They also have floated inventory levels that while all of that working against Solanas, and there was actually a report in Bloomberg, I believe just last week or within the last few weeks talking about the fact that maybe the chairman is out there looking for a potential replacement when his tenure ends, which I believe is at the end of 2026 for the CEO.
Yeah, it’s, it’s a fascinating piece of context too.
It’s not just pressure on that CEO from investors from dealers, it’s also from unions, right?
This is another case of the potential impact of labor and unions on a company’s bottom line.
Having said that this is also a name that is putting pressure on the broader European stock market.
Here.
We’ve gotten a litany of guidance cuts from European automakers.
Some that we are going to talk about here in just a second.
But the challenge of things like for example, your inventory, your supply being dated to consumers that are used to consistent product updates on their vehicles, that is certainly going to be a headwind for name like the
