Shareholders accuse Stellantis of stock price deception after disappointing earnings

A group of shareholders has filed a lawsuit in the United States against Stellantis, claiming the European-American automaker defrauded them by concealing rising inventories and other weaknesses before it posted disappointing earnings, causing its stock price to fall.

According to the Thursday complaint filed in Manhattan federal court, Stellantis artificially inflated its stock price for much of 2024 by making "overwhelmingly positive" assessments about inventories, pricing power, new products, and operating margin.

Investors said the real situation came to light on July 25 when Stellantis announced first-half adjusted operating income down 40 per cent at 8.46 billion euros ($9.28 billion), missing the 8.85 billion euros that analysts had expected.

"This lawsuit is without merit and the company intends to vigorously defend itself," Stellantis said in an emailed statement to Reuters.

Stellantis also said its adjusted operating income margin fell below its double-digit full-year target.

Its US-listed shares fell $1.94, or 9.9 per cent, to $17.66 over the two trading days following the announcement.

Also named as defendants are Chief Executive Carlos Tavares and Chief Financial Officer Natalie Knight.

Stellantis was created in 2021 from the merger of Fiat Chrysler and France's PSA. Its 14 brands also include Alfa Romeo, Citroen, Dodge, Jeep, Maserati, Opel, Peugeot, Ram and others.

Shareholders often sue companies in the United States following unexpected declines in their stock prices.

Thursday's lawsuit seeks damages of an unspecified amount for shareholders from Feb. 15 to July 24, 2024.

A lawyer for the shareholders did not immediately respond to requests for comment.

Stellantis shares closed up 1.7 per cent at $15.84 on Thursday in New York.

Last week, Stellantis said it may cut up to 2,450 jobs in the suburban Detroit truck assembly plant as production of the Ram 1500 Classic truck winds down.

The case is Long v Stellantis NV et al, US District Court, Southern District of New York,No.24-06196.