Barron's wrote positively about Chrysler-parent Stellantis in February, believing things could turn around at the embattled auto maker. We reiterated our view in May. Trying to catch a falling knife hasn't worked, though. It's time to admit we were wrong and review what changed.

Stellantis stock was $7.62 at the time of the first positive article, down substantially from January highs north of $11. A brutal $26 billion asset write down and dividend suspension catalyzed a 24% drop on Feb. 6.

Stellantis stock had seen better days even then. It traded north of $29 in March 2024, riding high on annual operating profits of roughly $25 billion following the 2021 formation of the company via the merger of Peugeot and Fiat Chrysler.

The profits, however, turned out to be ephemeral, built on the back of dealers who took more inventory than was necessary. Operating profit in 2024 was less than $10 billion. Stellantis lost about $1 billion in 2025. The reckoning with dealers led to a decline in sales and cost Carlos Tavares, an architect of the merger, his job.

It's been a painful period for Stellantis that was supposed to end with new CEO Antonio Filosa laying out a vision for the future in May. The vision came. It landed with a thud. Shares were roughly $7.50 at the time of the plan. They closed Wednesday at $5.43.

The problem wasn't the plan per se. Stellantis wants to grow sales from EUR154 billion in 2025 to EUR190 billion by 2030. The operating profit margin target is 7%, in line with other mass-market auto makers. Free cash flow is expected to return in 2027, if all goes to plan.

The problem is "if all goes to plan." That's no longer a safe assumption. European auto makers are becoming increasingly pressured by Chinese imports, impacting results at the likes of Mercedes-Benz Group and BMW.

China, more than anything, is the reason a Stellantis investment deserves a second look. The stock looks dirt cheap at less than 5 times estimated 2027 earnings. (Auto makers never get big multiples. General Motors trades for about 5.7 times estimated 2027 earnings.) The problem is the earnings estimates in the price-to-earnings ratio might be too optimistic.

Stellantis stock might still be a solid turnaround investment someday. Investors might want to wait for some sustained improvement in profit margins or cash flow.

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