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What Could Hurt Fiat Chrysler Stock This Week?

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Fiat Chrysler’s 1Q17 recap

In 1Q17, Fiat Chrysler Automobiles (FCAU) stock impressed investors by yielding more than 19% in returns. However, its stock began 2Q17 on a negative note. As of April 13, FCAU has lost 11.3% this month.

Let’s look at a few key factors that could continue to drive pessimism toward Fiat Chrysler’s stock this week, starting with a review of last week’s performance.

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Stock continued to fall

Last week (ended April 15), Fiat Chrysler traded on a negative note, ending the week at $9.70, which represents a 4.2% weekly drop.

On April 3, the company reported a 5% YoY (year-over-year) decline in its March month US sales. Fiat Chrysler’s 1Q17 sales fell ~8% on YoY (year-over-year) basis. These lower US vehicle sales could further hurt FCAU’s already low margins, which could be the key factor driving investor sentiments.

We should note that Fiat Chrysler’s profit margins are much lower than peers (VCR) General Motors (GM), Ford Motor (F), and Toyota Motor (TM).

Merger or no merger?

According to a Reuters report on April 14, Fiat Chrysler’s management denied that it was seeking a merger deal as a primary focus. In the past two years, Fiat Chrysler CEO (chief executive officer) Sergio Marchionne has shown his interest in merger talks with other mainstream automakers on many occasions.

However, during FCAU’s Annual General Meeting, Marchionne said that the company’s “primary focus is the execution of the plan,” referring to Fiat Chrysler’s 2018 business plan.

This week, FCAU’s stock could witness high volatility as investors react to FCAU’s management remarks related to merger possibilities. Technically, an immediate support level is seen near $9.45, followed by a key horizontal support level near $9.10.

Continue to the next part for a discussion of Tesla’s recent price movement and its key support and resistance levels for the week ahead.

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