Automaker Stellantis (STLA) is on the brink of facing a nationwide strike by the United Auto Workers (UAW) union if it falls back on its commitments made last year. UAW President Shawn Fain noted that union workers in at least seven local units are prepared to go on strike and file complaints against the company. The union alleges that Stellantis is not honoring its commitment to reopen the Belvidere Assembly Plant in Illinois, which has been idle since early 2023.
Interestingly, in its 2023 deal with Stellantis, the UAW secured the right to strike on certain issues such as plant closures, job outsourcing, and product and investment commitments.
Stellantis vs. UAW
On Friday, August 16, Fain highlighted that while Stellantis’ sales were declining and profits were shrinking, CEO Carlos Tavares’ salary package was ballooning.
The company has reportedly notified the union that “it will not launch the Belvidere Consolidated Mopar Mega Hub in 2024, it will not begin stamping operations for the Belvidere Mega Hub in 2025 and it will not begin production of a midsize truck in Belvidere in 2027.” In its complaint, the UAW demanded the withdrawal of Stellantis’ decision to push back these plans.
At the same time, the UAW asked the company to start planning and funding the Belvidere investments, as this would ensure job security for its workers. In the contract signed last year, Stellantis agreed to build a new $3.2 billion battery plant in Belvidere, invest $1.5 billion in a new mid-size truck factory in Belvidere, and add 5,000 jobs in the U.S. by 2028.
Hedge Funds Remain Positive on STLA
Despite Stellantis’ declining share price, hedge funds remain optimistic about the company’s prospects. According to TipRanks’ Hedge Fund Trading Activity tool, STLA has a Positive Hedge Fund Confidence Signal, as hedge funds increased their holdings of STLA shares by 3.3 million in the last quarter.
Is STLA a Good Stock to Buy?
On TipRanks, STLA has a Moderate Buy consensus rating based on 13 Buys, three Holds, and two Sell ratings. The average Stellantis price target of $27.26 implies 67.3% upside potential from current levels. Meanwhile, STLA shares have lost 25.3% year to date.
