Fiat Chrysler commemorated its listing on the NYSE with a banner outside of the NYSE.
It may be in the car business, but shares of the new Fiat Chrysler Automobiles have been riding a rollercoaster during their first day of trading on the New York Stock Exchange under the symbol FCAU.
Hoping to attract investors who want a piece of the Chrysler comeback story, the newly merged company will be offering shares on both the Milan and NY exchanges. But it appears that the market isn’t quite what sure to make of the trans-Atlantic automaker. FCAU opened in the Big Apple at $9 a share, surged to $9.55 and then quickly settled back. The stock, which had dropped as low as $8.84, closed the day at $8.92.
“Today marks the beginning of our journey as one global automaker, one FCA,” declared CEO Sergio Marchionne in a statement marking the start of Monday’s trading. But over the weekend, the executive who almost singlehandedly pushed through the alliance acknowledged, “I have no idea” how the market will react, suggesting the best he could offer was “SWAG,” or “scientific wild-ass guess, that the stock will “do well” in the “medium to long-term.”
There are reasons for more near-term uncertainty, analysts stress, noting that, on the positive side, the Chrysler side of the automaker has posted some of the industry’s biggest gains during the overall U.S. automotive recovery. But the Fiat side of the company is facing serious challenges, especially in its home European market. And both makers will need to work hard to expand their presence in emerging markets, especially China.
FCA CEO Sergio Marchionne gave reporters and analysts his vision for the now-merged company earlier this year.
“Nevertheless, the pair has used this period (since first teaming up in 2009) to redevelop the Chrysler Group’s product portfolio into the strongest line-up the automaker has had in years, which has led to a recovery in sales in its key US market as well as broaden its outlook in the rest of the world,” said a report from market research firm IHS Automotive. “Fiat has also heavily benefited from this relationship as it gave it the opportunity to return to North America’s mainstream sales categories.”
The IHS report cautioned that FCA won’t be trading in a vacuum, and its stock may be hurt by the slump Detroit rivals Ford and General Motors have fallen into in recent weeks. Morningstar Senior Analyst Richard Hilgert, noting the automaker is dealing with problems in Europe and South America, its two largest markets outside the U.S., said, “Fiat Chrysler’s stock is not for the faint of heart,” said in a note to investors.
Investors who held Fiat stock on Friday received shares of FCA. The company said 1.17 billion shares were offered. Marchionne and Fiat Chairman John Elkann will ring the closing bell today at 4 p.m., capping the automaker’s first day of trading in New York. Marchionne said recently the listing allows the company to be benchmarked against General Motors and Ford Motor Co.
(FCA’s Marchionne done in 2018. For more, Click Here.)
He added that FCA will release its nearly 35 million in shares – worth about $900 million – that it owns from former Fiat shareholders opting to sell instead of taking FCA shares and shares in its treasury; however, it will not be today or this week, adding this week isn’t a good time to offer them.
Investors are also wondering what sort of moves Marchionne might yet have up his sleeve. Though he seemed to make an unequivocal assertion in May that Fiat would not spin off its profitable Ferrari brand, there remains plenty of speculation that this will eventually happen.
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Ferrari has been roiled by turmoil of its own in recent weeks. The supercar brand has had one of its worst years ever on the Formula One racing circuit, and it recently saw the unplanned departure of its long-time CEO Luca di Montezemolo. For the indefinite future, Marchionne will apparently add direct oversight of the brand to his long list of assignments.
And one of the key questions he will have to answer is how big should the Ferrari brand be. Under Montezemolo, sales were limited to just 6,922 cars last year – down from the maker’s all-time peak, the 7,318 Ferraris sold in 2012 — even though there were waiting lists of several years for some key models. Whether or not to further expand production was reportedly a key disagreement with Marchionne that led to the Ferrari chief’s ouster.
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But for those who are anticipating a major increase in production Marchionne appeared to say he would stay pretty much on course. Keeping Ferrari a highly exclusive brand is “sacrosanct,” he told USA Today following a lavish bash in Beverly Hills over the weekend. “We take this damn thing seriously.”
So do investors, and it appears likely, analysts say, that with many questions unanswered, FCA shares could see plenty of volatility in the weeks to come.
Michael Strong contributed to this report.