A class action lawsuit was filed against Stellantis N.V. (STLA) by Levi & Korsinsky on August 15, 2024. The plaintiffs (shareholders) alleged that they bought STLA stock at artificially inflated prices between February 15, 2024 and July 24, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Stellantis stock during that period can click here to learn about joining the lawsuit.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Stellantis is a Netherlands-based global automotive manufacturer. The company boasts several renowned brands under its portfolio, including Maserati, Jeep, Dodge, Ram, Chrysler, Fiat, Peugeot, and others.
Stellantis’ tall claims about the company’s business prospects in 2024 are at the heart of the lawsuit.
Stellantis’ Misleading Claims
According to the lawsuit, Stellantis and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about inventory levels, pricing, and market share stabilizations from SEC filings and related material.
For example, during the Class Period, STLA announced its full-year Fiscal 2023 results. The company stated that the solid momentum experienced in 2023 was expected to continue this year. Stellantis also noted that reduced supply and logistics challenges, lower interest rates, and expanded product offerings would help it boost revenues and the adjusted operating income margin in 2024.
During the earnings call, the company’s CEO highlighted similar tailwinds for 2024, especially focusing on the profitability of its pickup trucks. In the same call, the CFO noted that he does not foresee any further inventory pile-up and continues to focus on pricing discipline.
However, subsequent events (discussed below) revealed that Stellantis and its executives were misleading investors about the inventory status, demand, production, and pricing pressures.
Plaintiffs’ Arguments
The plaintiffs maintain that the Defendants deceived investors by lying and withholding critical information about the company’s business and prospects during the Class Period. Importantly, the Defendants are accused of misleading investors about the inventory levels, pricing, and market share troubles.
The truth became clear on July 25, 2024, when STLA issued results for the first half of Fiscal 2024. Stellantis’ net revenues fell 14% year-over-year, while net profits declined 48%. The company attributed the poor financial performance to lower volume and price mix, foreign exchange headwinds, and restructuring expenses. Even STLA’s adjusted operating income fell meaningfully year-over-year, primarily due to poor North American operations.
The company stated that it was resorting to decisive actions to resolve operational issues, such as North American market share and inventory challenges. STLA shares fell 7.7% following the news. Stellantis also announced the possibility of selling its underperforming brands as well as reducing the production and prices of its autos.
To conclude, Stellantis allegedly misled investors about its inventory levels, falling U.S. market share, and pricing pressure. Year-to-date, STLA stock has declined 28.7%, causing massive damage to shareholder returns.
