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Why August Could Be a Great Month for Fiat Chrysler Stock

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Aug. 30 2017, Updated 6:36 a.m. ET

Fiat Chrysler stock

Last week, which ended on August 25, 2017, Fiat Chrysler (FCAU) stock continued to soar and ended the week with handsome gains of about 18.1%. In the previous week, the stock traded on a positive note and rose 8.2% on a weekly basis despite the broader market dullness.

Earlier in August, a report by Automotive News suggested that Chinese automakers are showing interest in acquiring FCAU and have made some offers. The report also highlighted that the offer made by a large Chinese automaker in August was rejected by Fiat Chrysler since it didn’t find it attractive enough.

Although this news has not been officially confirmed by Fiat Chrysler, it could be a key reason why FCAU stock has rallied in the last two weeks.

In 2Q17, FCAU’s Wall Street performance wasn’t any better than its peers (VCR) Toyota Motor (TM), General Motors (GM), and Ford Motor (F).

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Updates on acquisition bid

According to a Reuters report published on August 21, 2017, Great Wall Motors, a Chinese auto giant, has confirmed its interest in acquiring Fiat Chrysler Automobiles. However, it still remains a mystery whether Great Wall Motors is interested in acquiring the entire FCA group or just a specific segment of the business.

On August 25, Reuters reported that FCAU said it would “evaluate any inquiries about potential transactions.”

In 2Q17, FCAU’s key financial metrics such as profit margins and debt position reflected optimism. The company reported an adjusted net profit margin of 3.9% in 2Q17, which was much better than 1.2% in 2Q16.

Consistently improving margins and debt position along with firm European market sales could be the primary reasons the Chinese auto giant might be interested in a deal with Fiat Chrysler.

Read the next part, where we’ll see how Tesla stock traded last week.

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