Stellantis share price remains on edge, and is at risk of further downward momentum as its growth and profits slow and its exposure to the United States remain. STLA stock was trading at $12.90 in New York, down by over 53% from its lowest level in 2023. So, is it safe to buy the dip, hoping for a quick turnaround or sell the rip?
Stellantis business is facing risks
The automobile industry is going through the biggest changes on record. The biggest one is that China has become a major industry player as its brands have improved. This includes popular names like Nio, Xpeng, BYD, and Li Auto.
All these brands are experiencing double-digit growth, a trend that may continue as they increase their focus to the international market. As a result, analyst caution that many international brands that made a fortune in China will now continue slowing in the coming years.
The newest risk facing these companies is that the United States has implemented huge tariffs that could have major impacts going forward. Trump has added a 25% tariff on all products brought in the country from Canada and Mexico.
And while he has paused tariffs on the auto sector, he has insisted that they will go on later next month.
Trump hopes that these tariffs will force companies like Stellantis and General Motors to start manufacturing their vehicles in the United States.
Stellantis is highly exposed to tariffs on US goods because of its large presence in Mexico. It manufactures a third of the Ram truck in Mexico and two Jeep models in the country. Additionally, the firm makes its Chrysler model in Ontario, Canada, and is about to open a Dodge Charger facility in Canada.
Stellantis will, therefore, decide whether to maintain these locations or shift its vehicle production in the US. It may decide to move some of its Ram manufacturing to its facility in Detroit.
What is clear, however, is that Stellantis will be one of the most affected companies because these challenges come at a time when its business is in a crisis.
Profits have crashed
Stellantis’ business has gone through a rough patch in the past few years. This slowdown is mostly because of its perennial underinvestment in its American brands like Ram and Chrysler. Many of its other brands like Jeep, Alfa Romeo, and Maserati have continued to lose market share in key markets.
The most recent results showed that Stellantis shipments dropped by 12% to 5.4 million in 2024, which caused its revenue to crash 17% to €156.9 billion.
More data showed that the adjusted EPS dropped by 61% to €2.48, while the industrial free cash flow dropped by 147% to €6 billion. This continued decline may continue now that the company does not have a CEO.
Therefore, a combination of low revenue growth, management uncertainty, tariffs, and competition means that Stellantis will remain on edge for a long time.
Stellantis share price analysis: death cross nears
The weekly chart shows that the STLA share price has crashed this year and is hovering near its 61.8% Fibonacci Retracement level. It has dropped from $27.6 in 2024 to the current $12.89.
Worse, Stellantis share price is about to form a death cross pattern as the spread between the 50-week and 200-week moving averages has narrowed. This pattern often leads to further downside, especially when an asset lacks a clear catalyst.
Therefore, Stellantis stock price will likely have a bearish breakdown, with the next level to watch being at the 78.6% retracement point at $9.
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