Stellantis (STLA) stock slid on Tuesday as the company reported first quarter sales and shipments that fell compared to a year ago, just as a slew of new vehicles is poised to hit showroom floors later this year.
The Big Three automaker — which has a more European-focused product portfolio compared to rivals like GM and Ford — reported revenue of $44.54 billion, down 12% compared to a year ago.
On the conference call, CFO Natalie Knight said this was “due to transitions in product offering, inventory management, regional mix, and F/X impact.” Shipments also fell 10%, to 1.335 million globally, as the Ram, Jeep, and Fiat-parent said low inventories and supply kept deliveries down, but the company did say new products will replace discontinued models, leading to a boost in Q2 shipments and inventories.
Stellantis does not provide financial results for Q1 and Q3, only giving investors first-half and full-year results. Though the automaker confirmed its full-year 2024 guidance of double-digit adjusted operating income for the year with Knight claiming it will be in the low teens, Stellantis shares tumbled 10% in midday trade and are up 3% for the year.
Cleary investors and analysts were not assuaged by the fact that Stellantis sees Q2 shipments improving compared to Q1, revenue rising, and stronger industrial free cash flow in the back half of the year versus the first half. Stellantis also said lower shipments in Q1 were a good thing, which reflects a “non-repeat of [the] Q1 ‘23 inventory build.”
But with 25 new models on the way, there is worry that inventories could build back up and lead to discounting that will eventually hurt its margins.
“Concern over STLA’s bloated inventory levels is one of the primary reasons why we lowered our rating to Hold last month,” CFRA analyst Garrett Nelson said to Yahoo Finance. “In its key market of North America, STLA’s brands of Jeep, Dodge, Ram, Fiat, and Alfa Romeo all have among the highest inventory levels of any OEM brand.” Nelson lowered his price target on the stock to $24 from $30 after the Q1 release.
Nelson also points to an earlier analysis in which the CFRA team said it sees Stellantis as an automaker that might have to boost “incentives further and take other measures to better align supply with demand.”
On the pricing front, Knight did say Stellantis was “able to take our MSRPs down and incentives down, so we saw net pricing that was very, very stable” in the quarter, and believes the new products will drive “excitement” and sales in the second half of the year. And the company is having success with its plug-in hybrid electric vehicle sales, which were up nearly 80% in the quarter, with full EV sales up 8%, though on low volume.
Investors will be looking to see if new product offerings, including EV and hybrid range-extending versions of its popular Ram pickups, do indeed boost Stellantis’s fortunes later this year.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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