After starting the year off with a round of layoffs, Stellantis (NYSE:STLA) has announced even more job cuts. Indeed, the automaker is reportedly slashing another 400 white-collar jobs across its engineering, software and technology divisions.
As Seeking Alpha reports, this marks the third time in a year that the “Big Three” auto giant has reduced its workforce. Now, the market is not reacting well to the news. STLA stock closed today in the red by 0.10%, ending an otherwise positive week on a negative note.
What’s Happening With STLA Stock?
As noted, STLA stock has spent this week mostly trending upward. Specifically, shares rose on news of the company joining forces with California Governor Gavin Newsom on a series of green initiatives. STLA also climbed on the firm’s increased bet on air mobility innovator Archer Aviation (NYSE:ACHR). The company has given investors several reasons to bet on it this week, but now the layoffs may be calling its growth prospects into question.
Job cuts do not always negatively impact a company. But as the electric vehicle (EV) market is still struggling to rebound, Stellantis’ decision suggests that the company isn’t adapting as well as investors might like. As The Wall Street Journal reports:
“Stellantis said it made the decision to make the cuts after rigorous organizational reviews, and affected employees will be offered a comprehensive separation package and transition assistance. The reductions, effective March 31, will better align its resources and preserve critical skills needed to implement its EV production plans.”
Of course, it’s true that “Big Three” peers Ford (NYSE:F) and General Motors (NYSE:GM) both cut jobs in 2023 as EV demand slumped. While markets are likely to rebound this year, the transition to a more electrified future may not be so smooth for these legacy automakers. However, if Stellantis is able to streamline operations and reduce costs as a result of the recent cuts, STLA stock could still enjoy a turnaround in 2024.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
