We came across a bearish thesis on Stellantis N.V. on r/Valueinvesting by tomtim90. In this article, we will summarize the bears’ thesis on STLA. Stellantis N.V.’s share was trading at $7.77 as of February 24th. STLA’s trailing and forward P/E were 3.19 and 6.49 respectively according to Yahoo Finance.
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Stellantis N.V. engages in the design, engineering, manufacturing, distribution, and sale of automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, mobility services, and production systems worldwide. Stellantis is facing a deep fundamental deterioration that suggests materially more downside than upside at current levels.
The company recently announced a €22.2 billion write-down alongside a projected significant loss for the second half of 2025, effectively acknowledging that prior earnings were inflated by a failed EV-heavy strategy. Compounding the pressure, management suspended the 2026 dividend to preserve liquidity, removing a key pillar of shareholder support while signaling balance sheet strain.
Rather than investing aggressively for future growth, Stellantis is deploying approximately €6.5 billion in cash to terminate contracts and cancel electric vehicle programs such as the Ram 1500 EV, highlighting strategic missteps that are now translating into tangible cash outflows.
Operationally, the challenges extend beyond accounting adjustments. The company’s aggressive push into higher-priced electrified and hybrid models has been met with quality concerns, including battery failures, recalls, and customer dissatisfaction, particularly within core brands like Jeep and Ram.
Dealer inventories remain elevated across CDJR networks, reflecting weak demand for premium trims and EV variants that appear misaligned with the traditional customer base. This inventory buildup pressures pricing, margins, and working capital, further weighing on free cash flow. At the same time, competitive intensity from peers such as Toyota and Ford Motor Company is eroding brand loyalty, raising concerns about market share durability.
With earnings resetting lower, leverage likely to rise, capital returns halted, and operational execution under scrutiny, Stellantis appears to be entering a prolonged restructuring phase. Absent a clear catalyst for margin recovery or demand stabilization, the risk profile remains skewed to further downside as fundamentals continue to weaken.
Previously, we covered a bullish thesis on Stellantis N.V. (NYSE:STLA) by Clean_Bag_5433 in January 2025, which highlighted the company’s strong balance sheet, net cash position, EV leadership, and high dividend yield. STLA’s stock price has depreciated by approximately 40.45% since our coverage. tomtim90 shares a contrarian view but emphasizes on deteriorating fundamentals, a €22.2B write-down, dividend suspension, and downside risks.
Stellantis N.V. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held STLA at the end of the third quarter which was 28 in the previous quarter. While we acknowledge the risk and potential of STLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than STLA and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
