Stellantis is grappling with leadership instability following CEO Carlos Tavares’ unexpected resignation amid a 7.60% stock drop, now valued at €11.576. The company faces a 45% decline in shares this year, prompted by a profit warning. Tavares’ management style drew criticism, with labor leaders calling for change. As Stellantis searches for a new CEO, potential candidates include Luca de Meo and internal leaders. Revised financial targets for 2024 signal significant challenges ahead.
Stellantis Faces Leadership Turmoil Amid Significant Stock Drop
Stellantis has opened the week at the lowest point of the CAC 40 index, experiencing a staggering decline of 7.60%, bringing its share price down to €11.576. This downturn follows the unexpected resignation of CEO Carlos Tavares, who had planned to retire in early 2026. Henri de Castries, the lead independent director and former head of Axa, cited ‘differences of opinion’ with the board as a reason for the abrupt departure. Tavares, renowned for revitalizing PSA and Opel and founding Stellantis, has seen a rapid decline in his reputation in 2024.
Since the beginning of the year, Stellantis’s stock has plummeted by 45%, marking it as the second-largest drop within the CAC 40. This decline follows a significant profit warning issued on September 30, which raised concerns among investors.
Implications of Tavares’ Departure for Stellantis and Its Future
Reports suggest that Tavares’ controversial management style, characterized by intense pressure on employees and drastic decision-making, may have contributed to his downfall. Shawn Fain, leader of the American union UAW, views Tavares’ exit as a positive step, claiming that the company has been poorly managed and that workers have been mistreated for an extended period. His tenure is marked by painful layoffs and unsold vehicle inventories left with dealers.
Investors now face a unique challenge as Stellantis seeks new leadership. JP Morgan has indicated that the market may not anticipate any significant profit improvements in the 2025 fiscal year until a new management team is in place. The firm is looking forward to hearing from John Elkann, the chairman representing the Agnelli family, who is the largest shareholder in Stellantis, regarding future priorities.
UBS has noted that the timeline for appointing a new CEO has been accelerated by approximately six months, which may alleviate some uncertainty. Despite facing potential execution risks, UBS considers Stellantis to be a compelling turnaround opportunity for 2025. However, Morgan Stanley raised concerns about the possibility of divergent strategic views within the company, which could lead to further investor uncertainty until a new CEO is appointed—a topic that has been a point of speculation in the market.
As the search for a new CEO begins, JP Morgan has identified several possible candidates, including Luca de Meo, the head of Renault, as well as Stellantis’ own Maxime Picat, who oversees purchasing, and Antonio Filosa, who leads operations in North America.
Stellantis announced a revision of its 2024 targets in late September, projecting a current operating margin between 5.5% and 7%, a significant reduction from their previous ‘double-digit’ expectations. Additionally, they anticipate an industrial free cash flow ranging from -5 billion to -10 billion euros, in stark contrast to earlier projections of positive cash flow. The company confirmed these adjustments recently.
The board of directors is currently managing the search for a permanent CEO, which is expected to conclude in the first half of 2025. In the interim, a temporary executive committee, led by John Elkann, will oversee operations during this transitional period.
© 2024 Agence Option Finance (AOF) – All reproduction rights reserved by AOF. AOF compiles its data from trusted sources, but readers are encouraged to interpret the information with caution. AOF and its contributors are not liable for any claims arising from the use of this information. Agence Option Finance (AOF) is a brand of the Option Finance group.