On October 13th, Fiat Chrysler Automobiles made its first Wall Street debut to great fanfare, listing on New York Stock Exchange. Investors like you might desire more information about this, and I am willing to help.
?What is the company?
?Why would it initial its IPO in New York?
In 2009, Fiat SpA took control of Detroit’s Chrysler Group from bankrupcy and has gradually increased its ownership stake and finally completed its buyout earlier this year. Now it is the seventh-largest auto maker, established as a Netherlands-based holding group with global headquarters in London. Besides, this New York Stock Exchange show is not an IPO. Actually, it is only transferring its primary listing from Milan to New York by taking stock formerly traded under Fiat SpA and re-listing it in the U.S. under FCA. Doing this, Mr. Marchionne, the president of FCA, aims at gaining a deeper pool of investors.
?Will FCA be a good choice of investment?
According to FCA, its target is a 60 percent boost in sales to seven million vehicles and a fivefold increase in net profit to as much as 5.5 billion euros by 2018—the year Marchionne has said he would step down as CEO after seeing through his plan. However, this growth plan won’t come cheap which means that Mr. Marchionne need to be at his persuassive best. Besides, analysts think the U.S. auto industry is nearing a peak, while Europe is struggling to recover from years of decline and growth in China and Latin America has slowed so that Richard Hilgerd, an analyst at Morningstar even said, “Only those willing to accept the risks of a highly leveraged turnaround situation in a competitive, captital-intensive, highly cyclical industry should consider investing.” But there is still something good to look upon. Fiat Chrysler sold a total of 4.4 million cars and trucks in 2013 and in 2014 sales of all Fiat Chrysler brands have seen a sales rise of some 15% year-to-date. Also, one thing long-term investors like to measure is valuation. According to Marchionne, auto stocks in general is under valued. After all, the industry has stepped into the transition period and once coming out, it will see a soar in sales and of course in stock price. And the good news is that data from FactSet on price to estimated earnings in both 2015 and 2016, Fiat Chrysler stock is among the cheapest of all stocks in the auto sector.
Now you have known FCA more, and make your choice.