Stellantis(STLA.US) was hit by a shareholder lawsuit alleging that it concealed financial weaknesses, causing its share price to fall. The company denied the allegations.
Stellantis (STLA.US) is facing a lawsuit filed by shareholders in the US who allege the company hid inventory increases and other internal weaknesses, leading to a drop in its share price after it reported disappointing earnings, which they say is a fraud. The suit, which was filed Thursday in the US District Court for the Southern District of New York, alleges that the company artificially inflated its share price by making “extremely positive” assessments of inventory, pricing power, new products and operating margins during most of 2024. The suit seeks unspecified damages from Stellantis for the period from Feb. 15, 2024, to July 24, 2024. The company said the suit was without merit and that it would vigorously defend itself.
Stellantis is also planning to stop production of the Ram 1500 Classic truck later this year at a factory in Michigan, and to cut 2,450 jobs there, which shows the company is facing a double whammy of falling market share and production adjustments.
Despite Stellantis’s record-breaking financial performance in 2023, with net revenue of €189.5bn and a profit of €18.6bn, its financial performance in the first half of 2024 has fallen short of expectations, with a 48 per cent drop in profit year on year.
Stellantis’s share price has also been hit by these factors, falling 32 per cent this year.