Poof—and a giant auto company emerges. It’s mysteriously called Stellantis, and it’s the product of Fiat Chrysler’s merger with Peugeot. Stellantis is, by marriage, one of the once-dominant Detroit Three auto makers, with General Motors and Ford Motor.
A lot has changed since the D-3 ruled. Chrysler merged, demerged, merged again. General Motors went bankrupt in the financial crisis. Today, electric-vehicle start-up Tesla is the world’s most valuable auto maker. Tesla has been around for 17 years, but compared with the D-3, it’s a pup. Tesla shipped some 500,000 vehicles in 2020, Stellantis eight million, making it the third- or fourth-largest auto maker on the planet. Volumes fell for most car makers in 2020—but not for Tesla.
Still, the stock looks promising. J.P. Morgan’s Jose Asumendi began covering Stellantis last week with a Buy and an 18 euro ($21.90) price target. That’s a 35% implied gain on the current $16.15. He believes the two legacy firms complement each other. Fiat lost money in Europe; Peugeot will help with that. Peugeot wasn’t a big player in North America; Chrysler is. He says the larger entity can cut costs and streamline capital spending, eventually producing annual savings in excess of €5 billion.
About 70% of analysts covering the stock rate it Buy. The average Buy ratio for Dow Jones Industrial stocks is 57%. Stellantis is down 11%, year to date, in contrast to GM, up 33%, and Ford, up 31%. Investors are starting to value those companies’ autonomous and EV investments more highly. With the merger closed, Stellantis should start talking about its EV plans.
Last Week
Inauguration Highs
U.S. markets were closed for Martin Luther King’s Birthday, but stocks rose around the world. With earnings rolling out in earnest, U.S. indexes hit new highs as the new president was (peacefully) sworn in. The rally was fueled by hopes for a jumbo relief measure and by huge numbers from Netflix. The Dow and S&P 500 slipped on Friday, weighed down by concerns about old tech: IBM and Intel. On the week, the Dow industrials edged up 0.6%, to 30,996.98; the S&P 500 rose 1.9%, to 3841.47; and the Nasdaq Composite gained 4.2%, to 13,543.06.
Transitions
Former President Trump left the White House and flew to Mar-a-Lago, the first outgoing president to refuse to greet his successor in 150 years. Security in Washington, D.C., was tight as President Biden was sworn in, speaking of unity and civility. Law-enforcement officials continued to round up suspects alleged to have participated in the Capitol riot. Few threats, however, materialized against state capitols or Washington, D.C.
Biden: First Moves
Biden signed a stack of executive
orders on Day One, and kept on signing, targeting dozens of Trump policies: killing the Muslim ban, rejoining the Paris climate accord and World Health Organization, canceling the Keystone XL pipeline, and seeking to reunite children separated at the border. He also outlined big initiatives—further Covid relief, steps to boost the economy, and immigration reform—and liberated Dr. Anthony Fauci.
Pardons and Impeachments
Trump signed 143 pardons and commutations before exiting, including for former adviser Steve Bannon, GOP donor Elliott Broidy, singer Lil Wayne, convicted Republican officials, and others. Not on the list were his children, anyone involved in the Capitol riot, lawyer Rudolph Giuliani, or himself. In Congress, GOP Leader Mitch McConnell said Trump “provoked” the Capitol riot, while the House said it would send an impeachment article to the Senate on Monday.
The 100-Day Vaccine Goal
Biden has set as a goal 100 million vaccinations in the first 100 days. The head of the World Health Organization warned of a “catastrophic moral failure” as poorer nations struggle to get vaccines. Meanwhile, the U.S. death toll breached 400,000, and some 900,000 workers filed for unemployment.
Navalny Returns to Jail
Russian dissident Alexei Navalny was arrested when he and his wife flew from Germany to Russia after recovering from an assassination attempt by poisoning. The arrest spurred international demands to release him and Navalny urged supporters to take to the streets.
Annals of Deal-Making
Optical components maker Lumentum Holdings agreed to buy laser maker Coherent for $5.7 billion….Mytheresa Group, the Munich-based luxury e-commerce company and former Neiman Marcus subsidiary, went public, valued at $2.2 billion. Mytheresa had been subject of a creditor dispute after a spinoff and Neiman’s bankruptcy.
Write to Al Root at allen.root@dowjones.com
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Old Car Brands Emerge in a New Packaging to Compete in a World Fixated on Tesla. - Barron's
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