Stellantis in hot water as shareholders’ lawsuit seeks damages after disappointing earnings

Stellantis, the global automotive giant formed from the merger of Fiat Chrysler and PSA Group, is facing a lawsuit from shareholders in the United States. The lawsuit, filed in Manhattan’s federal court, accuses Stellantis of misleading investors by concealing rising inventories and other financial weaknesses, which ultimately led to a significant drop in the company’s stock price.

According to the complaint, Stellantis allegedly kept its stock price artificially high throughout 2024 by issuing overly optimistic reports on its inventories, pricing power, new products, and operating margins. The truth emerged on 25 July when Stellantis reported a 40% decline in its first-half adjusted operating income, which fell to €8.46 billion ($9.28 billion). This figure was below the €8.85 billion analysts had anticipated.

The announcement caused Stellantis‘ U.S.-listed shares to plummet by nearly 10%, dropping $1.94 to $17.66 over two trading days. The company’s adjusted operating income margin also slipped below its target for the year, raising further concerns among investors.

“This lawsuit is without merit, and the company intends to vigorously defend itself,” Stellantis stated in an email to Reuters. The automaker’s CEO, Carlos Tavares, and CFO, Natalie Knight, are also named as defendants in the case.

Stellantis, which boasts a portfolio of 14 brands including Jeep, Dodge, Peugeot, and Maserati, has not been immune to industry challenges. Last week, the company announced plans for up to 2,450 layoffs at its suburban Detroit truck assembly plant, where production of the Ram 1500 Classic truck is set to end.

The lawsuit seeks unspecified damages for shareholders who purchased Stellantis stock between 15 February and 24 July 2024. Legal analysts note that such lawsuits are common in the U.S. following unexpected stock price declines. Stellantis shares closed at $15.84 on Thursday, up 1.7%.

The case is filed under Long v Stellantis NV et al, in the U.S. District Court, Southern District of New York, No. 24-06196.

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