By Al Root
First came the write-down, then came the redemption.
Chrysler-parent Stellantis hosted its capital markets day on Thursday, outlining goals for its turnaround plan. The targets are ambitious. But if management executes, the benefits for shareholders will be material.
The stock is down about 30% this year, though roughly flat since Barron's Investor Circle introduced it as a pick on Feb. 13. The turnaround plan is a good idea, and it supports a much higher stock price down the road. We're sticking with the pick.
One of the former Detroit-Three wants to grow sales from EUR154 billion in 2025 to EUR190 billion by 2030. The operating profit margin target is 7%, in line with other mass-market auto makers. Free cash flow will return in 2027, if all goes to plan, and grow to EUR6 billion annually by 2030.
That would result in a free cash flow yield of about 30% at current stock levels. Car companies don't get big valuation multiples. General Motors trades for about 6.5 times estimated 2027 free cash flow, which works out to a 15% yield. (The multiple and yield are inverse to each other.)
Helping make all that happen will be new cost-cutting and platform consolidation programs, which lead to benefits of scale by reducing unique parts. There will also be new models. Car companies are always offering updated or new models.
It's a very sensible plan. Barclays analyst Dan Levy called the goals hard to achieve. Oxcap analyst Stuart Pearson thought the company did enough to satisfy investors, though.
"Strategy is nothing without execution, but Stellantis' new 'FaSTLAne' plan helps shift the narrative from existential crisis to its right to be in the running to become Europe's designated survivor in the coming Darwinian automotive battle," Pearson wrote on Friday.
The car business in Europe is tough right now, amid trade battles with the U.S. and Chinese imports like BYD, Geely Automobile Holdings, or NIO.
Wall Street's reaction to the event was cautious. The market reaction was OK. Stellantis stock traded to almost $7 a share early on Thursday, down about 50 cents, but recovered to close at $7.56, up 3 cents on the day.
Shares were up another 1.1% in midday trading on Friday, leaving them down 26% over the past 12 months and almost 60% over the past five years. Things have been rocky for the car company lately. Inflated dealer inventories, labor unrest, management turnover, rising quality costs, tariffs, and other issues weighed on profitability.
Stellantis earned an operating profit of almost EUR34 billion in 2023. In 2025, it lost roughly EUR1 billion.
Problems culminated on Feb. 6. Shares plunged 24% after the company announced EUR22 billion in write-downs and suspended its dividend. Barron's picked Stellantis stock about a week later, believing all the bad news was reflected in the share price.
Now management needs to execute.
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May 23, 2026 04:04 ET (08:04 GMT)
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