Stellantis Q4 2025 Guidance Call Reinforces Turnaround Narrative but Highlights Execution Risks

What happened

Stellantis held its Q4 2025 guidance call, offering updates on financial performance and strategic direction amidst a challenging turnaround. The call likely emphasized progress on the $13 billion U.S. investment program to boost North American margins, aligning with the DeepValue report's base scenario of gradual recovery. However, management's optimism on European stabilization must be critically assessed against the report's evidence of structural overcapacity, with Italian production at a 68-year low and persistent EV price cuts. Investors should question whether guided improvements in industrial free cash flow are sustainable, given the company's negative working capital and heavy simultaneous capex in the U.S. and Europe. This guidance underscores the narrow path to value realization, requiring concrete proof in upcoming H2 2025 results and the 2026 Capital Markets Day.

Implication

The guidance call reinforces that Stellantis' turnaround hinges on successful execution of its U.S. reinvestment and European utilization improvements, both of which remain unproven. Until H2 2025 results demonstrate sustained margin expansion and positive industrial free cash flow, the stock's low multiples may reflect a value trap rather than a deep discount. Critical monitoring of Italian production data and pricing trends is essential to gauge whether European headwinds are abating or persisting. Investors with high risk tolerance might consider entry near the $9.00 attractive level, but should size positions cautiously due to governance flux and cyclical volatility. Overall, patience is warranted to confirm the base scenario's probability before committing capital beyond speculative bets.

Thesis delta

The guidance call does not shift the core investment thesis but tightens the timeline for validation. The DeepValue report's 'WAIT' rating remains intact, as management's projections require verification against upcoming financial disclosures. Any deviation from guided improvements in H2 2025 could prompt a reassessment towards the bear scenario, emphasizing the high execution risk.