Fiat Chrysler Automobiles NV (NYSE:FCAU) received a tepid response from investors during its first day of trading at Wall Street on Monday, October 13, 2014.
Sergio Marchionne, CEO of Fiat Chrysler Automobiles NV (NYSE:FCAU) said the management of the automaker is finally taking Chrysler back to the U.S. stock market. He said, “One of the Detroit Three is coming home.”
Exclusive: York Capital to wind down European funds, spin out Asian funds
York Capital Management has decided to focus on longer-duration assets like private equity, private debt and collateralized loan obligations. The firm also plans to wind down its European hedge funds and spin out its Asian fund. Q3 2020 hedge fund letters, conferences and more York announces structural and operational changes York Chairman and CEO Jamie Read More
Long journey back to U.S. stock market
It took more than seven years before Chrysler finally returned to the U.S. stock market. In 1998, Chrysler merged with Daimler AG (ETR:DAI) and formed DaimlerChrysler. In 2007, The German automaker decided to sell its 80% stake in DaimlerChrysler to Cerberus Capital Management. The private equity firm renamed the automaker Chrysler LLC.
In 2009, Chrysler LLC filed for bankruptcy, and reorganized itself. At the time, the UAW Retiree medical Benefits Trust owned 55%, Fiat S.p.A. (ADR) (OTCMKTS:FIAT) (BIT:F) held 20% while The United States and the Canadian governments owned minority stakes in Chrysler.
Fiat S.p.A. (ADR) (OTCMKTS:FIAT) acquired full control of Chrysler this year and decided to combine all its businesses under the Fiat Chrysler Automobiles NV (NYSE:FCAU). The new company is based in London with operations in Turin and Detroit.
In an interview with CNBC, Marchionne said, “Chrysler stock has been away from New York for 15 years. I’m fairly proud of what we’ve done.” He added the Wall Street is fairly valuing automakers except Tesla Motors Inc (NYSE:TSLA). He added, “I don’t think we should be given such a low grade.”
Fiat Chrysler Automobiles’ stock performance
Fiat Chrysler Automobiles NV (NYSE:FCAU) opened $9.00 per share during its first day of trading in New York. The stock traded as much as $9.95 but closed $8.92 per share, down 0.89%.
Commenting on the return of Fiat Chrysler Automobiles NV (NYSE:FCAU) to the U.S. stock market, Richard Hilgert, an analyst at Morningstar commented, “Only those willing to accept the risks of a highly leveraged turnaround situation in a competitive, capital-intensive, highly cyclical industry should consider investing.”
Fiat Chrysler Automobiles NV (NYSE:FCAU) is the seventh-largest automaker worldwide. The company decided to trade its stock in the United States as part of its initiative to establish itself as one of the leading global player in the auto industry.
Fiat Chrysler Automobiles’ five-year investment plan
According to Marchionne, Fiat Chrysler Automobiles NV (NYSE:FCAU) intends to raise debt financing to fund its $60 billion five-year investment plan.
Ian Fletcher, an analyst at IHS Automotive forecasted that Fiat Chrysler Automobiles NV (NYSE:FCAU) will struggle to meet Marchionne’s aggressive sales target for the company. Fletcher said, IHS “does not currently expect this plan to succeed.”
Fiat Chrysler Automobiles NV (NYSE:FCAU) aims to increase its sales by 60% to 7 million vehicles and to boost its profit to around $6.9 by 2018.
Fiat Chrysler Automobiles NV (NYSE:FCAU) is also trading its stock in Milan.