Why Fiat Chrysler Stock Turned Slightly Positive in August



Fiat Chrysler stock

Last week, Fiat Chrysler stock (FCAU) rose 1.7% to close at $17.11. In August, the stock turned positive and inched up by 0.8% after falling for the previous two months. The stock plunged by about 18.7% and 10.1% in June and July, respectively.

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Weak Q2 2018

FCAU released its second-quarter earnings on July 25. In the second quarter, its adjusted earnings fell ~10% YoY (year-over-year) to 0.62 euros, or ~$0.72 per share, missing Wall Street analysts’ estimates of 0.85 euros. During the earnings event, the company also revised its 2018 outlook downward just like peers (IYK) General Motors (GM) and Ford (F). FCAU now expects its 2018 adjusted EBIT to be between 7.5 billion and 8.0 billion euros, down from the original guidance of 8.7 billion euros.

Change in leadership

Michael Manley took charge as Fiat Chrysler’s new CEO on July 21, 2018, due to former CEO Sergio Marchionne’s critical health condition. Marchionne passed away on July 25, and he played an important role in reviving Fiat Chrysler’s profitability and saving it from bankruptcy. It will be a big challenge for Manley, who was heading the company’s Jeep and Ram brands earlier, to fill Marchionne’s shoes amid the industry-wide weakening sales in the US.

In July 2018, FCAU’s US sales went up by 6% YoY. July was the fourth consecutive month that FCAU’s US sales recovered YoY after 18 consecutive months of YoY declines. This consistent recovery could be one of the reasons why its stock turned slightly positive in August.

The downward revision of its 2018 outlook and uncertainties about auto tariffs could continue to keep Fiat Chrysler’s stock mixed in September. Luxury car brand Ferrari (RACE) was owned by FCAU until January 2016 when it officially spun off Ferrari as a separate publically listed company.

In the next part, we’ll learn how Tesla stock traded in August.


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