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In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Crazy Stocks

Will Waymo boost Fiat Chrysler Automobiles (FCAU)?

The sick man of the auto industry; Fiat Chrysler Automobiles N.V. (NYSE: FCAU), could get a big boost from Waymo. In detail, Waymo is Alphabet’s (NASDAQ: GOOG) self-driving vehicle subsidiary.

Notably, Jefferies’ equity analysts are bullish on Waymo and Alphabet (NASDAQ: NASDAQ: GOOG). In fact, Jefferies analysts estimate Waymo is worth $250 billion, Business Insider notes.

Fiat Chrysler Automobiles could profit because most of Waymo’s self-driving vehicles are Chrysler Pacifica vans. In particular, Pacifica vans are the basis of the Waymo One autonomous taxi service being tested in Phoenix.

Will Waymo One Boost Fiat Chrysler Automobiles (FCAU) Value?

Hence, Waymo One’s appearance could boost Fiat Chrysler Automobiles’ value.

For instance, Waymo One’s debut apparently inspired Jefferies’ bullish view of Alphabet. Specifically, Waymo One debuted on 5 December 2018 and Jefferies’ bull claims appeared on 19 December 2018.

On the other hand, Fiat Chrysler Automobiles is not providing the computers or software that controls the self-driving vans. Instead, Fiat Chrysler builds the hardware (the vans) while Waymo provides the operating system.

Fiat Chrysler Automobiles (FCAU) has created a platform for autonomous driving

Thus, Fiat Chrysler Automobiles has created a platform for autonomous driving technology.

Obviously, other self-driving vehicle systems can use Chrysler‘s platform. Examples of such systems include the Apple Car and NVIDIA’s Drive processor for autonomous vehicles.

Tellingly, neither Apple (NASDAQ: AAPL) or NVIDIA (NASDAQ: NVDA) owns a car factory. On the other hand, Fiat Chrysler Automobiles owns auto factories in Europe, China, North America, and elsewhere.

In addition, Fiat Chrysler Automobiles has a network of dealers to market and service autonomous vehicles. Plus, Fiat Chrysler offers vehicle financing in the United States.

Fiat Chrysler Automobiles (FCAU) could market several self-driving vehicles

Additionally, Fiat Chrysler owns several successful and well-respected auto brands. Those brands include Chrysler, Dodge, Jeep, the Ram Trucks, Fiat, Alpha Romeo, and Maserati.

Under those circumstances, Fiat Chrysler Automobiles is an excellent position to manufacture, market, and distribute several platforms for autonomous driving. To explain, each platform is a self-driving vehicle such as a van or a truck.

Moreover, actual human beings might want to ride in Fiat Chrysler’s vehicles. Alphabet’s one effort at creating a vehicle; the widely mocked Google Car, quickly became a bad joke.

Is Fiat Chrysler Automobiles (FCAU) a value investment for self-driving vehicles?

Therefore, Fiat Chrysler Automobiles (FCAU) could be a value investment for autonomous vehicles.

In particular, Fiat Chrysler stock is cheap right now. For instance, FCAU shares were trading at $14.58 on 26 December 2018. However, Alphabet stock was trading at $1,029.41 a share on the same day.

Hence, Fiat Chrysler is a cheap alternative to Alphabet in the autonomous vehicle realm. This will prompt value investors to take a second look at Fiat Chrysler Automobiles.

Is Fiat Chrysler Automobiles (FCAU) Making Money?

Yes, Fiat Chrysler Automobiles is making money. For instance, Fiat Chrysler recorded a gross profit of $4.66 billion on revenues of $138.51 billion for 3rd Quarter 2018.

Specifically, Fiat Chrysler recorded a $3.729 billion net income for 3rd Quarter 2018. In addition, Fiat Chrysler records a gross income of $4.01 billion for 3rd Quarter 2018.

Conversely, Fiat Chrysler records a negative “free-cash-flow” of -$463 million. In addition, Fiat Chrysler admits to losing -$8.362 billion in cash from investing and -$2.043 billion in cash from financing in 3rd Quarter.

However, Chrysler records $10.97 billion in cash from operating during 3rd Quarter. Notably, Fiat Chrysler achieved record profits in North America in 3rd Quarter 2018, Bloomberg claims. For instance, North America accounts for 97% of Fiat Chrysler’s $2.3 billion adjusted 3rd Quarter earnings.  

Fiat Chrysler Automobiles (FCAU) is now Two Companies

Hence, Fiat Chrysler is making a lot of money in North America but losing a lot of money elsewhere. I think Fiat Chrysler is financing money-losing operations in Europe and Asia with North American cash.

In fact, Bloomberg labels Fiat Chrysler Automobiles, two companies. To explain, the companies are a profitable American operation in Detroit and a money-losing old world outfit in Turin.

On the positive side, business is booming in North America. For instance, North American sales of the Ram 1500 pickup rose by 10% in September 2018. Plus, North American Jeep sales grew by 20% during September 2018.

On the negative side, Fiat Chrysler’s sales in Asia fell by 26% during the 3rd Quarter, Bloomberg reports. In particular, Fiat Chrysler Automobiles lacks a strong dealer network in China, the world’s largest vehicle market.

How Much Money is Fiat Chrysler Automobiles (FCAU) Making?

Not surprisingly, Fiat Chrysler is having a hard time keeping its cash. For instance, Fiat Chrysler Automobiles reported $14.21 billion in cash and short-term investments on 30 September 2018.

Comparatively, the Ford Motor Company (NYSE: F) recorded $36.34 billion in cash and short-term investments on 30 September 2018. In comparison, General Motors (NYSE:  GM) recorded $24.34 billion in cash on the same day.

Fiat Chrysler Automobiles is a risky bargain because it faces serious threats overseas and tremendous opportunities in North America. In particular, autonomous vehicles could make up for the losses in China.

Fiat Chrysler Automobiles (FCAU) is planning a Dividend for 2022

However, I think Fiat Chrysler is worth the risks because of the low price. I believe the growth in North America and autonomous vehicles will make Fiat Chrysler a lucrative company in the near futures.

Unfortunately, Fiat Chrysler Automobiles is not paying a dividend. On the other hand, the company is planning a dividend for 2022, Reuters claims.

Under these circumstances, Fiat Chrysler is a good stock for people with a high-risk tolerance. If you want a speculative play in vehicles, check out Fiat Chrysler Automobiles. I think this company could be a moneymaker if it doubles down on North America and autonomous vehicles.