by Eric J. Lyman
ROME, July 25 (Xinhua) -- Shares in Italian-American carmaker Fiat-Chrysler took a beating Wednesday, with three pieces of major bad news -- weaker-than-expected financial results, threats of new tariffs from the United States, and the death of the chief executive who saved the company -- all breaking at once.
On the Italian Stock Exchange in Milan, shares in the world's eighth largest carmaker fell as much as 16 percent, shaving around 4.5 billion euros (5.3 billion U.S. dollars) off the company's market capitalization. Trading in the shares were halted early in the session after it quickly lost a tenth of the market value after the opening bell.
It was the biggest one-day drop for the company since January 2016, and the shares reached their lowest point so far this year.
"Today was kind of a perfect storm for Fiat," Javier Noriega, chief economist with investment bankers Hildebrandt and Ferrar, told Xinhua. "The bad news kept coming."
For the April-to-June period, Fiat-Chrysler earned 1.7 billion euros (2.0 billion U.S. dollars), below analysts' forecasts and 11 percent below earnings for the same quarter a year ago. The company also said it expected revenue of between 115 and 118 billion euros (135 to 138 billion U.S. dollars) for 2018 as a whole, lower than the 125 billion euros (147 billion U.S. dollars) it told analysts to expect earlier.
Fiat-Chrysler, like most car companies, was stung by new threats out of Washington, where U.S. President Donald Trump, who said Wednesday he was considering a new 25-percent tariff on cars imported into the country. U.S. tariffs were already hurting auto makers by pushing metal and machine parts prices higher.
But all of the recent developments were overshadowed by the death of Sergio Marchionne, who is credited from guiding the company's rebirth over the last several years. The company revealed Marchionne's health problems less than a month ago, and the 66-year-old director only formally left his job four days before his death. In recent days, the company confirmed Marchionne was gravelly ill but some analysts said his death still unnerved investors.
Marco Leonardi, an economist with the University of Milan, told Xinhua it was important not to judge the company's strength on the basis of a single day -- no matter how difficult.
"You can't look at what happens on a day-to-day basis when it comes to a big multinational company like Fiat-Chrysler," Leonardi said. "You have to look at the long-term trends and strategies."
Mike Manley, the former head of Fiat-Chrysler's successful Jeep division who was named to replace Marchionne as the company's chief executive, spoke to reporters Wednesday after the release of the second-quarter financial results and guidance. He said that while the company's long-term prospects were good, it could continue to struggle in the short term because of eroding demand for cars. Manley singled out the Chinese market as a cause for concern for the company.
"The biggest challenges we face, and frankly the biggest we will continue to face, are all focused on Asia and China," Manley said, noting that supply outstripping demand, particularly for high-end cars, is forcing the company to lower prices. He said he was working on a five-year plan that would set the direction of the company going forward.