Stellantis, one of the world’s largest automakers, just posted a 70% drop in net profit for 2024, with revenue slipping 17% to €156.9 billion.
While the company is making moves to stabilize its finances and profit, the big question remains: Is Stellantis still a smart investment?
Financial Breakdown: What Went Wrong?
Several factors contributed to Stellantis’ rough year, including a 12% drop in shipments, gaps in its product lineup, and an aggressive inventory reduction strategy. The company also saw negative €6 billion in industrial free cash flow, which signals a difficult balancing act between investments and revenue generation.
“While 2024 was a year of stark contrasts for the Company, with results falling short of our potential, we achieved important strategic milestones. Notably, we began the rollout of new multi-energy platforms and products, which continues in 2025, started production of EV batteries through our JVs, and launched the Leapmotor International partnership. Stellantis’ dedicated and talented people are driving forward with energy and determination, engaging with key stakeholders and moving decision-making closer to our customers. We are firmly focused on gaining market share and improving financial performance as 2025 progresses.” – John Elkann, Chairman
Dividend Payout: A Red Flag or a Sign of Strength?
Despite its losses, Stellantis is still offering a dividend payout of €0.68 per share, translating to a 5% yield. While this may seem like a confident move, some analysts are questioning whether the company can afford to continue rewarding shareholders when profits have dropped so significantly.
The company has a strong liquidity position, with €49.5 billion in industrial cash. However, with uncertainty in the EV market, continued high production costs, and CEO transition challenges, some investors may see the dividend payout as unsustainable.
What to Watch in Q1 2025 Earnings
As Stellantis looks to regain its footing, investors should keep an eye on these key factors in Q1 2025 earnings:
- Revenue Growth: The company has projected “positive net revenue growth,” but will it deliver?
- Operating Margin: Stellantis expects a mid-single-digit AOI margin—a critical measure of profitability.
- EV and Hybrid Performance: The company is betting on new STLA Medium and STLA Large platforms—will these models boost sales?
- Leadership Transition: A new CEO will be announced in mid-2025. How will this impact the company’s direction?
Final Verdict: Buy, Hold, or Sell?
Stellantis remains a high-risk, high-reward stock. The company’s financial reserves and product innovations suggest a potential comeback, but profitability concerns and market competition remain strong headwinds. For risk-tolerant investors, holding or buying on dips may be worthwhile. Conservative investors, however, may want to wait until Q1 2025 earnings for clearer signs of recovery.
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