Stellantis, the company created by the merger of Fiat Chrysler Automobiles and Peugeot-owner PSA Group, had a positive start on its U.S. and European stock market debuts.
Shares in Stellantis (NYSE: STLA) closed Tuesday’s trading in New York up 10.8 percent to $16.88.
The company’s shares rose 8 percent on their first trading day on Monday, valuing the business at around 42 billion euros ($51 billion).
“We have the scale, the resources, the diversity and the knowhow to successfully capture the opportunities of this new era in transportation,” Stellantis Chairman John Elkann said in a video on the Borsa Italiana website.
Stellantis CEO Carlos Tavares said the merger would add 25 billion euros ($30 billion) in value for shareholders over the years, thanks to projected cost cuts.
“I can tell you that the focus from day one will be on the value creation that is the result of the implementation of those synergies,” Tavares said in the same video.
Stellantis was created on Saturday with the completion of the merger between FCA and PSA.
With annual production of around 8 million vehicles and revenues of more than 165 billion euros, the company is expected to play a key role in the industry’s jump into the new era of electrification.
Stellantis will have 14 brands, from FCA’s Fiat, Maserati and U.S.-focused Jeep, Dodge and Ram to PSA’s traditionally Europe-focused Peugeot, Citroen, Opel and DS.
Stellantis shares started trading at 12.758 euros in Milan where the ticker STLA replaced Fiat Chrysler’s symbol and at 10:00 GMT were up 7.5 percent at 13.51 euros. The Paris-listed shares, where the company listed in place of Peugeot SA, traded around the same level. That compares with FCA‘s close on Friday at 12.57 euros.
The stock will debut in New York on Tuesday.
A Milan-based trader said part of the rise can be explained by technical reasons, with funds buying shares to adjust their portfolio exposures to the new company. Also, former FCA investors are reinvesting part of the proceeds of a 2.9 billion euro special divided FCA paid them last week, a second trader said.
Tavares, 62, held his first press conference as Stellantis CEO on Tuesday, after ringing NYSE’s bell with Elkann.
FCA and PSA were worth a combined 39.4 billion euros ($47.6 billion) at the close of trading last week, a fraction of the $783 billion market capitalization of Tesla, the world’s most valuable automaker.
Over the weekend, PSA shares were exchanged into new FCA shares. All FCA shares were then renamed as Stellantis.
Intesa Sanpaolo analyst Monica Bosio said she expected markets would start pricing in synergies at Stellantis only once their impact becomes visible starting from the second half of this year.
“However, even excluding synergies, we continue to view Stellantis as underappreciated on all metrics in comparison with its most direct peers,” Bosio said in a note.
FCA and PSA have said Stellantis can cut costs by more than 5 billion euros a year without plant closures.
Bloomberg Intelligence analyst Michael Dean said Stellantis faces a mixed outlook.
U.S. stimulus plans may buoy Chrysler but there is a more uncertain outlook for PSA in Europe amid continued lockdowns, he said.
Dean expects Tavares to present a new strategy in the first 100 days of his stewardship of Stellantis, just as he did following PSA’s acquisition of Opel from General Motors in 2017.
Reuters and Bloomberg contributed to this report