Stellantis shares rise as turnaround plan, cost cuts gain traction

Share from Star they went up on Wednesday as the result of the third quarter of the European car giant shows that it has made progress with the turnaround plan of 60 billion euros.

Third-quarter revenue rose 1% to 37.6 billion euros from a year ago, the Chrysler and Jeep owner said on Wednesday, while adjusted operating income rose 184% to 256 million euros from 90 million euros a year ago.

The auto industry’s free cash flow rose to negative 4 billion euros, from negative 4.3 billion a year earlier.

Stellantis on Wednesday also reaffirmed its 2026 guidance and target to achieve positive free cash flow next year, which is a key focus for investors.

“Q3 was soft, but consensus expectations were far lower. The key here is that the ’26 Guide is maintained while OEMs and other auto suppliers are cutting higher costs,” RBC Capital Markets analyst Tom Narayan said in a note to investors.

Shares of Stellantis on the New York Stock Exchange rose 13% on Wednesday to close at $4.69 a share. Shares in Milan closed at 4.28 euros, up 15.4%. Stocks in both markets remain down sharply since the start of the year.

Stellantis CEO Antonio Filosa told investors Wednesday that the company is ahead of schedule in its turnaround plan, which was announced in May. He said Stellantis expects to exceed its previously announced cost-cutting efforts of 6 billion euros under its plan in 2028, including 2.4 billion euros to start 2027.

“We are very confident in reaffirming our ’26 guidance. That includes ’27 free cash positive,” said Filosa Wednesday in response to concerns about the carmaker’s ability to achieve its free cash flow target.

Stellantis’ 2026 guidance includes single-digit percentage increases in net profit and operating margin that were adjusted lower.

Stellantis’ turnaround plan includes investing 36 billion euros in its portfolio of automotive brands, with 60% of the cash going to the struggling North American sector. It also plans to introduce new vehicles, refresh models, and incorporate new technologies into its products.

Stellantis targets revenue growth of approximately 23%, from 154 billion euros last year to 190 billion euros in 2030, with an adjusted operating margin of 7%.

European automakers, including Stellantis, have struggled in China as domestic brands like Xiaomi, BYD and Geely gain ground and increase competition.

Just this week, German luxury carmaker Porsche said it would reduce its exposure to China because of declining car sales in the region. Meanwhile, Mercedes-Benz said the third quarter car sales slumped due to the “challenging market environment,” in the country.

Earlier this month, Filosa told CNBC that European regulators should do more to incentivize automakers to produce vehicles in the region to fight off Chinese rivals.

Filosa calls for regulation that “encourages, rewards, and protects those who can demonstrate that they design cars, engineer cars.”