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Why Fiat Chrysler’s 2Q16 Earnings Triggered a Selling Spree

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Nov. 20 2020, Updated 4:56 p.m. ET

Fiat Chrysler’s 2Q16 earnings

The Italian-American auto giant Fiat Chrysler Automobiles (FACU) released its 2Q16 earnings report on July 27, 2016. The company reported solid adjusted EPS (earnings per share) of 0.45 euros, or $0.51, about 55% higher than its adjusted EPS in 2Q15. This was also higher than the analysts’ estimate of 0.39 euros, or $0.43.

Before we look at the key highlights of Fiat Chrysler’s 2Q16 earnings, let’s take a quick look at how investors reacted on the day of the earnings release.

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Why did earnings trigger a selling spree?

On the day of its 2Q16 earnings release, FCAU’s stock witnessed massive selling pressure to close at $6.70, which was 4.3% lower than its previous close. Stagnation in the company’s 2Q16 revenues and shipments along with concerns over the growth potential of the US auto demand could be what triggered this selling spree on Wall Street.

Moreover, this was not a new phenomenon for Fiat Chrysler’s stock as it also fell on the day of its solid 1Q16 earnings release.

In 2Q16, Fiat Chrysler attracted massive selling pressure and saw a value erosion of 23.7%. This was much higher than the losses seen in the stocks of other mainstream automakers. The largest US automaker (XLY), General Motors (GM), fell by 10.0%, and the second-largest US automaker, Ford (F), fell by 6.9% in 2Q16.

The US electric carmaker Tesla (TSLA) also slipped by 7.6% in 2Q16. The company is set to release its second quarter earnings on August 3, 2016. Investors can read what analysts are estimating for Tesla’s 2Q16 earnings in our series: Tesla Gigafactory Is Opening, but What about 2Q16 Earnings?

Series overview

In this series, we’ll explore Fiat Chrysler Automobiles’ 2Q16 revenues and profitability. We’ll find out what factors drove FCAU’s 2Q16 earnings. We’ll take a closer look at the company’s revised guidance for fiscal 2016. Towards the end of the series, we’ll take a look at some important factors that may drive the company’s valuation in the coming quarters.

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