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Stellantis shares soar in first day of trading as investors welcome merger

Stellantis logo

Stellantis shares are soaring today during their first day of trading, as investors seem to have welcomed the merger between Fiat Chrysler and Peugeot with a positive tone.

The stock, which trades under the ticker FCA in Milan’s stock exchange and as STLA in New York and Paris, saw its value rise to €14.22 since the stock trading session started, as investors celebrated the completion of a deal that dates back to 2019.

The combined entity – now known as Stellantis – is an automobile behemoth with combined annual sales of nearly 8 million vehicles, which results in roughly €180 billion in revenue and €10 billion in operating profit based on the financial results reported by the two companies in 2019.

The merger was successfully cleared by more than 14 different jurisdictions in which the two companies have operations and the corporation will now serve as an umbrella for an ample portfolio of vehicle brands including Fiat, Alfa Romeo, Peugeot, Maserati, Open, and others.

As a result of the merger, Stellantis would effectively slash around €5 billion amid the positive synergies between the two automakers, while the firm’s head, Carlos Tavares, who led PSA Group prior to the merger, said the company would generate roughly €25 billion in additional value to Stellantis shareholders through different cost-cutting measures that won’t affect the company’s employees or its plants.

Meanwhile, credit rating agency Standard & Poor’s raised its rating for Stellantis to BBB- with a stable outlook, up from a previous BB+ the firm had assigned Fiat Chrysler.

The agency highlighted that the newly-emerged company has a “solid balance sheet” and a “large liquidity buffer”, which provides the group with enough solidity to withstand the temporary turmoil caused by the COVID-19 pandemic including the “mobility restriction risks” resulting from the health emergency.

What’s next for Stellantis shares?

stellantis shares 1
Stellantis (MIL: FCA) price chart – 1-day candles view with volume, RSI, and MACD – Source: TradingView

The positive tone instilled by the completion of this long-dated merger to the price action could result in a new bullish phase for Stellantis shares, at least until the company starts revealing its first few trading updates and financial statements.

For now, the price is bouncing strongly off oversold levels in the RSI, while it is also struggling to fill a gap left behind on 13 January after FCA completed the distribution of a special €1.84 per share cash dividend that was contingent to the completion of the merger.

Meanwhile, today’s action is also leaving behind a large bullish gap, which could help sustain a bull run over the coming weeks if investors continue to be optimistic about the future of the automobile giant.

For now, a first target for Stellantis shares can be set at €17 euro per share based on the Fibonacci extension shown in the chart, mostly supported by today’s price gap. At this price, the firm would be valued at $63 billion or $11 billion higher than the $52 billion price tag of the merger.

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Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.