"Buy low and sell high" is seemingly as simple an investing axiom as can be, yet far more challenging to achieve, since there's little use trying to time the market. That complexity helps explain the apparent opportunity that Stellantis (STLA 2.71%) currently offers investors.
In fact, over the past three years, Stellantis' stock has shed 35% of its value. Meanwhile, Ford Motor Company -- which is battling warranty costs and quality issues -- posted a 9% gain, and General Motors left competitors in the dust with a 122% gain as the Detroit icon's stock appears to be firing on all cylinders.
The complexity goes even further for potential Stellantis investors because they need to consider another question: Can recently appointed CEO Antonio Filosa transform a struggling, identity-lacking Stellantis into a high-flying investment?
Image source: Stellantis.
What's the plan with Stellantis?
Stellantis has lost its way a bit. It never fully formed a new true identity after the 2021 merger of Fiat Chrysler and France's PSA Group left a portfolio of 14 brands and just as many questions as answers. Despite a sweeping review of its entire business and strong promises of change, Stellantis now intends to maintain its current construction as a global automaker. It believes that powerhouse brands from Chrysler, such as strong performer Jeep, are no more important than Fiat and Peugeot on the other side of the equation.
Stellantis began suffering serious market-share declines under former CEO Carlos Tavares, along with a number of other difficulties, such as a strained relationship with its dealer network. To begin the automaker's drastic turnaround, it will take a series of difficult decisions, adjusted targets, and hefty investments.
One example: While former CEO Tavares pledged to sell only electric vehicles (EVs) in Europe, and 50% EVs in the U.S. market, by 2030, Stellantis has walked back and downplayed these targets since his departure in December 2024.
One key investment will involve the core of its product portfolio and a significant driver of its bottom line: Jeep. Jeep remains the key cog in the Stellantis machine. The automaker plans to launch four new or refreshed Jeep models over a 12-month period, including a highly important new Cherokee model that will help to fill the shoes of high-volume discontinued products.
That Jeep investment is small compared to the $13 billion Stellantis has pledged to invest in the U.S. over the next four years. It's a massive decision that was brought on by President Donald Trump's tariffs on imported vehicles and automotive parts.
NYSE: STLA
Key Data Points
It won't only be Stellantis' high-powered Jeep brand leading a turnaround. The company's Ram brand, which ranks as its most profitable brand, will likely have growth opportunity as the current administration dials back emissions regulations. On the flip side of its Ram brand, however, are hybrids, which the company is now prepared to embrace as hype around full-electric vehicles slows in the U.S. with the expiration of the federal $7,500 EV tax credit.
"The segment of the U.S. market that has the fastest growth in the last year has been hybrid," Filosa said during a conference organized by Goldman Sachs. "So we are launching that because we truly believe that hybrid is going to be one of the favorite powertrains in the U.S. ... We really believe in this technology, and want to expand this technology for other applications."
Long road ahead
For investors, a juggernaut global automaker such as Stellantis shedding roughly a third of its value over the past three years could signal an opportunity to buy low and sell high post-turnaround. However, savvy investors would be wise to recognize a very long road ahead for the automaker. Along with the issues already outlined, it must also deal with disappointing U.S. sales and potential oversupply, a flawed pricing strategy that doesn't match perceived quality and price, a lack of affordable models in the brands that customers want, and a jumbled list of brands that are partially neglected and need investment.
These problems won't turn around overnight. While a resurging Jeep brand could be huge for the company in the near term, Stellantis needs to show progress in many other areas before investors can feel comfortable jumping on board this turnaround.
