Stellantis (STLA) took a hit today after financial firm S&P Global (SPGI) downgraded the automaker’s credit rating from BBB+ to BBB due to worries about the company’s ability to maintain its profit margins. The rating agency expects Stellantis’ EBITDA margin growth in 2025 to fall short of previous expectations, partly thanks to price reductions in North America and tariff risks. As a result, Stellantis’ margin growth is expected to come in below the 10% threshold required for a BBB+ rating.
The downgrade also reflects Stellantis’ struggles to regain market share in North America and Europe. Indeed, the company continues to face intense competition and increased price sensitivity, which makes it challenging to increase market share without lowering prices or adding incentives. Therefore, although S&P expects Stellantis’ shipments to grow by 2.5% in 2025, this will likely come at the expense of margin growth.
Interestingly, S&P also criticized Stellantis’ management team for being too slow to fix problems in North America. The company also made mistakes when it came to pricing and product offerings. These errors led previous CEO Carlos Tavares to step down after sales saw a significant drop. Even though the company has made some changes to try to improve, investors are still worried, which has been reflected in the stock price.
Is STLA a Good Stock to Buy Now?
Turning to Wall Street, STLA stock has a Moderate Buy consensus rating based on five Buys, eight Holds, and one Sell assigned in the last three months. At $14.45 per share, the average Stellantis price target implies an upside potential of 13.4%. It is also worth noting that shares of the company have declined 50% over the past year.
