Stellantis Sued By Shareholders Over Alleged Financial Misrepresentation

Stellantis, the automaker formed from the merger of Fiat Chrysler Automobiles (FCA) and PSA Group, is facing a shareholder lawsuit in the United States. The legal action accuses the automaker of misleading investors about its financial health, specifically concealing rising inventories and other weaknesses that later led to a significant drop in the company’s stock price.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, claims that Stellantis artificially inflated its stock price throughout the first half of 2024 by issuing overly positive statements regarding its inventories, pricing power, new product launches, as well as operating margins. According to the shareholders, the truth about the company’s financial struggles emerged on July 25, 2024, when Stellantis reported that its adjusted operating income for the first half of the year had plunged by 40% to €8.46 billion ($9.28 billion). This figure fell short of the €8.85 billion ($9.71 billion) expected by analysts, sparking a sharp decline in the company’s stock price.

In the two trading days following the earnings announcement, Stellantis’ U.S.-listed shares dropped by $1.94, or 9.9%, to $17.66. The lawsuit names Stellantis CEO Carlos Tavares and CFO Natalie Knight as defendants, alleging that they contributed to the misrepresentation of the company’s financial position.

In response to the lawsuit, Stellantis issued a statement calling the claims “without merit” and expressing its intention to “vigorously defend itself” against the allegations.

The lawsuit seeks unspecified damages for investors who purchased Stellantis shares between February 15 and July 24, 2024, during which the company’s stock was allegedly overvalued due to misleading statements. It is not uncommon for shareholders to file lawsuits against companies in the U.S. following unexpected declines in stock prices.

Sources: Automotive News, Reuters