Is this automaker free?
The market values Stellantis at roughly the cash in its coffers - 14 brands and factories around the world as if they had no value. But half of that cash is borrowed. Is it the opportunity of a decade, or a trap?
Key points
Stellantis' market capitalization has fallen to the level of cash in its coffers, as if the 14 brands were worthless
Half of the ten billion euros in the coffers did not come from operations but from bond issuance with coupons up to 8.25%
Morgan Stanley and Berenberg have lowered targets to levels that nevertheless remain above the current share price
North American margin remained at 1.6% even with thirty percent revenue growth, and inventories grew by a fifth
The 2030 plan promises operating profit equal to today's entire company value, but the market doesn't count on it at all
The day after the bottom: the CEO repeats the plan, the market repeats the sell-off
On Monday, September 29, Stellantis shares $STLA closed at $4.43, the lowest since the company's creation through the merger of Fiat Chrysler and PSA in January 2021. Since the start of the year, they have lost nearly 60%. The very next day, CEO Antonio Filosa stood on the stage at the Automotive News conference in Detroit and repeated the full-year outlook: revenue growth in the mid-single digits, low single-digit operating margin, positive industrial free cash flow in 2027, and over 3 billion euros of free cash in 2028. While he spoke, the stock fell even lower, to $4.36.
Here begins the paradox that makes this story worth watching. Stellantis has 14 brands, earned 153.5 billion euros last year, and as of June 30 sat on 10.0 billion euros of net industrial cash, i.e., cash after deducting the debts of the automotive portion of the company. The market capitalization of the entire company is around 13 billion dollars, roughly 11 to 12 billion euros.
In other words: anyone buying Stellantis stock today pays almost exclusively for the cash in the coffers. Factories, brands Jeep, Ram, Peugeot, and Fiat, the entire global distribution and a business that generated one billion euros of free cash in the last quarter - all of that comes almost free in the price. The question is why the market allows it.