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Why Fiat Chrysler Stock Lost Its Glory in February 2018

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Mar. 8 2018, Updated 10:31 a.m. ET

Fiat Chrysler stock

In February 2018, Fiat Chrysler (FCAU) stock turned negative and fell 12.3%. In January, the stock outperformed the broader market and other automakers’ stocks, posting solid gains of 35.5%.

In 2017, the S&P 500 index rose 19.4%, while FCAU rose 96.4%. Let’s take a look at some recent developments for Fiat Chrysler.

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February 2018 US sales

In February 2018, FCAU’s US sales fell 1% YoY (year-over-year). Its sales have fallen for the past 17 months.

The company continued to cut its US fleet sales in February, which drove its fleet sales down 3% YoY. It reported a 10% YoY rise in its Jeep brand for the US market. FCAU’s strategy to focus on more profitable retail sales and cut fleet sales seems to have helped it improve its profit margins in the last few quarters.

Possible negative factors

Fiat Chrysler is known to have the worst profit margins among mainstream automakers. The company has managed to improve its profit margins in the last eight quarters; however, it still faces challenges to make its profit margins comparable to other automakers such as Ford (F), General Motors (GM), and Toyota (TM).

President Trump’s plan to impose a tariff on steel and aluminum imports in the United States could negatively affect FCAU’s efforts to improve its profit margins with increased costs of production. That could be a reason the stock saw a sharp downward correction in February.

In the next part, we’ll look at Tesla and its stock’s recent price action.

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