Stellantis Shareholders File Lawsuit Amid Cratering Profits

Shareholders have taken Stellantis to court in the Southern District of New York, accusing the automaker of pulling a fast one by hiding surging inventories and other flaws.

A lawsuit filed by Levi & Korsinsky on behalf of Steven Long highlights that on July 25, 2024, Stellantis disclosed in a press release its financial outcomes for the first half of the year. It revealed a significant earnings decline, attributing it to poor margins and elevated inventory levels in its U.S. operations.

Moreover, Stellantis CEO Carlos Tavares hinted at potential cuts for underperforming brands, while CFO Natalie Knight indicated the possibility of reducing production and adjusting vehicle prices.

Read: Stellantis US Sales Fall 21%, Rolls Out $2,000 Incentive To Stop The Bleeding

The lawsuit alleges that Stellantis artificially inflated its stock price throughout much of 2024 by repeatedly making “overwhelmingly positive” assessments about inventories, pricing power, new products, and operating margin. When its financial results were posted, it was revealed that adjusted operating income had fallen 40% to €8.46 billion ($9.28 billion). Stellantis’s stock price fell over 7% on July 25.

Stellantis shareholders who incurred a loss between February 15, 2024, and July 24, 2024, can submit a claim by October 15, 2024, and join the lawsuit. The suit names Carlos Tavares and Natalie Knight as defendants.

Speaking with Reuters, Stellantis said that “this lawsuit is without merit and the company intends to vigorously defend itself.”

It’s worth noting that shareholders frequently sue publicly traded companies in the United States after unexpected stock price declines, and there’s no guarantee that this lawsuit against Stellantis will prove successful. Nevertheless, it’s clear that Stellantis is struggling.

In recent months, at least five executives have left the brand, and in mid-July, Stellantis sued a fourth supplier over recent price hikes. Some of its sub-brands are also dealing with a threat from CEO Tavares that they could be axed if they do not start making money.